Vaughn Company purchased machinery for $608400 on January 2, 2023. Straight-line depreciation has been recorded based on a $30600 salvage value and a 3-year useful life. The machinery was sold on March 2, 2025 at a gain of $11900. The journal entry to record the sale of the machinery will include O a credit to Gain on Disposal for $18700. O a debit to Accumulated Depreciation - Equipment for $385200. O a debit to Cash for $203000. O a credit to Equipment for $191100.
Vaughn Company purchased machinery for $608400 on January 2, 2023. Straight-line depreciation has been recorded based on a $30600 salvage value and a 3-year useful life. The machinery was sold on March 2, 2025 at a gain of $11900. The journal entry to record the sale of the machinery will include O a credit to Gain on Disposal for $18700. O a debit to Accumulated Depreciation - Equipment for $385200. O a debit to Cash for $203000. O a credit to Equipment for $191100.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:Vaughn Company purchased machinery for $608400 on January 2, 2023. Straight-line depreciation has been recorded based on a
$30600 salvage value and a 3-year useful life. The machinery was sold on March 2, 2025 at a gain of $11900. The journal entry to
record the sale of the machinery will include
O a credit to Gain on Disposal for $18700.
O a debit to Accumulated Depreciation - Equipment for $385200.
O a debit to Cash for $203000.
O a credit to Equipment for $191100.
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