Windsor Ltd. owned several manufacturing facilities. On September 15 of the current year, Windsor decided to sell one of its manufacturing buildings. The building had cost $5,140,000 when originally purchased 6 years ago and had been depreciated using the straight-line method with no residual value. Windsor estimated that the building had a 20-year life when purchased.
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.
![Prepare the journal entry to record the sale of the building on Windsor's books, assuming 6 years of depreciation has already
been recorded in the accounts to the date of disposal. The building was sold for $3,598,000 cash. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts. List all debit entries before credit entries.)
Date
Account Titles and Explanation
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19e49528-67dd-4aeb-a968-ea029577d9c0%2F06781a03-7763-443f-9b90-1e03e699a48c%2Fxjiiiyp_processed.jpeg&w=3840&q=75)
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Windsor Ltd. owned several manufacturing facilities. On September 15 of the current year, Windsor decided to sell one of its
manufacturing buildings. The building had cost $5,140,000 when originally purchased 6 years ago and had been depreciated using the
straight-line method with no residual value. Windsor estimated that the building had a 20-year life when purchased.
(a)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19e49528-67dd-4aeb-a968-ea029577d9c0%2F06781a03-7763-443f-9b90-1e03e699a48c%2F9htyur7_processed.jpeg&w=3840&q=75)
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