Wellsburgs Co. Purchased equipment costing $840,000 on credit with an eight year life, and estimated $28,000 salvage value on January 1, 2004. Wellsburgh Co. Will depreciated the equipment using the double declining balance method. required: 1) Calculate depreciation expense for the equipment for 2004, and 2005. 2) Prepare the Journal entries to record the following. a) purchased of equipment on January 1, 2004. b) Depreciation in 2004.
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.
Wellsburgs Co. Purchased equipment costing $840,000 on credit with an eight year life, and estimated $28,000 salvage value on January 1, 2004. Wellsburgh Co. Will
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