The following information applies to the questions displayed below.] Precision Construction entered into the following transactions during a recent year. January 2 Purchased a bulldozer for $282,000 by paying $36,000 cash and signing a $246,000 note due in five years. January 3 Replaced the steel tracks on the bulldozer at a cost of $36,000, purchased on account. The new steel tracks increase the bulldozer's operating efficiency. January 30 Wrote a check for the amount owed on account for the work completed on January 3. February 1 Repaired the leather seat on the bulldozer and wrote a check for the full $2,400 cost. March 1 Paid $13,200 cash for the rights to use computer software for a two-year period. For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Precision Construction should report for the quarter ended March 31. The equipment is depreciated using the double-declining-balance method with a useful life of five years and $56,000 residual value. (Do not round intermediate calculations.) Partial Year Depreciation-Equipment [ ] Amortization-Licensing Rights [ ] Make a journal entry to record the depreciation and amortization calculated in requirement 2. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Record the depreciation and amortization expense on the bulldozer and computer software for the quarter ended March 31. (Note: Enter debits before credits.) Date General Journal Debit Credit March 31 Depreciation Expense [ ] [ ] Amortization Expense [ ] [ ] Accumulated Depreciation—Equipment [ ] [ ] Accumulated Amortization [ ] [ ]
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.
Required information
[The following information applies to the questions displayed below.]
Precision Construction entered into the following transactions during a recent year.
| January | 2 | Purchased a bulldozer for $282,000 by paying $36,000 cash and signing a $246,000 note due in five years. | ||
| January | 3 | Replaced the steel tracks on the bulldozer at a cost of $36,000, purchased on account. The new steel tracks increase the bulldozer's operating efficiency. | ||
| January | 30 | Wrote a check for the amount owed on account for the work completed on January 3. | ||
| February | 1 | Repaired the leather seat on the bulldozer and wrote a check for the full $2,400 cost. | ||
| March | 1 | Paid $13,200 cash for the rights to use computer software for a two-year period. |
For the tangible and intangible assets acquired in the preceding transactions, determine the amount of depreciation and amortization that Precision Construction should report for the quarter ended March 31. The equipment is
Partial Year
Depreciation-Equipment [ ]
Amortization-Licensing Rights [ ]
Make a
- Record the depreciation and amortization expense on the bulldozer and computer software for the quarter ended March 31. (Note: Enter debits before credits.)
Date General Journal Debit Credit
March 31 Depreciation Expense [ ] [ ]
Amortization Expense [ ] [ ]
Accumulated Amortization [ ] [ ]
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