The following are selected transactions affecting the Campbell Company's long-term assets during the 2014 fiscal year. Campbell's year-end is December 31. Jan 1 Renovated an office building and expanded its capacity at a cost of $200,000. This building was purchased on January 1, 2009 for $530,000 with an estimated useful life of 20 years, a salvage of $30,000 and being depreciated on a straight-line basis. The renovations increased the salvage value of the building to $50,000. Jun 30 Sold a piece of equipment that was purchased on January 1, 2012. The equipment cost $60,000, and had a useful life of 8 years with a $6,000 salvage value and was being depreciated using the double-declining balance method. The equipment was sold for $36,000. In regards to the January 1 transaction, this event should be accounted for as a(n): O Revenue Expenditure Capital Expenditure O Operating Expenditure O Financing Expenditure QUESTION 16 Referring to the information presented above in #15, record the June 30 journal entry to recognize the sale of the equipment. O Debit Cash 36,000; debit Accumulated Depreciation 30,469; credit Equipment 60,000; credit Gain on Sale 6,469 O Debit Cash 36,000; debit Accumulated Depreciation 26,250; credit Equipment 60,000; credit Gain on Sale 2,250 Debit Equipment 60,000; debit Loss on Sale 2,250; credit Accumulated Depreciation 26,250, credit cash 36,000 Debit Cash 36,000; debit Accumulated Depreciation 24,000; credit Equipment 60,000
The following are selected transactions affecting the Campbell Company's long-term assets during the 2014 fiscal year. Campbell's year-end is December 31. Jan 1 Renovated an office building and expanded its capacity at a cost of $200,000. This building was purchased on January 1, 2009 for $530,000 with an estimated useful life of 20 years, a salvage of $30,000 and being depreciated on a straight-line basis. The renovations increased the salvage value of the building to $50,000. Jun 30 Sold a piece of equipment that was purchased on January 1, 2012. The equipment cost $60,000, and had a useful life of 8 years with a $6,000 salvage value and was being depreciated using the double-declining balance method. The equipment was sold for $36,000. In regards to the January 1 transaction, this event should be accounted for as a(n): O Revenue Expenditure Capital Expenditure O Operating Expenditure O Financing Expenditure QUESTION 16 Referring to the information presented above in #15, record the June 30 journal entry to recognize the sale of the equipment. O Debit Cash 36,000; debit Accumulated Depreciation 30,469; credit Equipment 60,000; credit Gain on Sale 6,469 O Debit Cash 36,000; debit Accumulated Depreciation 26,250; credit Equipment 60,000; credit Gain on Sale 2,250 Debit Equipment 60,000; debit Loss on Sale 2,250; credit Accumulated Depreciation 26,250, credit cash 36,000 Debit Cash 36,000; debit Accumulated Depreciation 24,000; credit Equipment 60,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS:
The following are selected transactions affecting the Campbell Company's long-term assets during the 2014 fiscal year. Campbell's year-end
is December 31.
Jan 1
Renovated an office building and expanded its capacity at a cost of $200,000. This building was purchased on January 1, 2009 for
$530,000 with an estimated useful life of 20 years, a salvage of $30,000 and being depreciated on a straight-line basis. The renovations increased the
salvage value of the building to $50,000.
Jun 30 Sold a piece of equipment that was purchased on January 1, 2012. The equipment cost $60,000, and had a useful life of 8 years with a
$6,000 salvage value and was being depreciated using the double-declining balance method. The equipment was sold for $36,000.
In regards to the January 1 transaction, this event should be accounted for as a(n):
Revenue Expenditure
O Capital Expenditure
Operating Expenditure
Financing Expenditure
QUESTION 16
Referring to the information presented above in #15, record the June 30 journal entry to recognize the sale of the equipment.
Debit Cash 36,000; debit Accumulated Depreciation 30,469; credit Equipment 60,000; credit Gain on Sale 6,469
Debit Cash 36,000; debit Accumulated Depreciation 26,250; credit Equipment 60,000; credit Gain on Sale 2,250
Debit Equipment 60,000; debit Loss on Sale 2,250; credit Accumulated Depreciation 26,250, credit cash 36,000
Debit Cash 36,000; debit Accumulated Depreciation 24,000; credit Equipment 60,000
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