THE VEHICLE HAS A USEFUL LIFE OF 8 YEARS AND SALVAGE VALUE OF 40,000. PREPARE THE ADJUSTING ENTRIES: RECORD THE DEPRECIATION EXPENSE ON DEC 31, 2019 FOR BOTH THE EQUIPMENT AND VEHICLE? 1. DR. =? 2. =? 3. CR. =? 4. =? 5. CR. =? 6. =?
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.
Problem: THE COMPANY PURCHASED EQUIPMENT FOR 366,000 ON SEP 30, 2019 AND VEHICLE AMOUNTING TO 750,000 ON DEC 31, 2018. THE EQUIPMENT HAS AN ESTIMATED USEFUL LIFE OF 5 YEARS AND SALVAGE VALUE OF 5,000 AND THE VEHICLE HAS A USEFUL LIFE OF 8 YEARS AND SALVAGE VALUE OF 40,000.
PREPARE THE
1. DR. =? 2. =?
3. CR. =? 4. =?
5. CR. =? 6. =?
choose from the following accounts for the correct account of adjusting entries>
A.
B. ACCUMULATED DEPRECIATION - VEHICLE
C. EQUIPMENT
D. VEHICLE
E. DEPRECIATION EXPENSE
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