Depreciation : Depreciation is a reduction in the value of a fixed asset over its useful life due to usage or wear and tear. Depreciation is an expense and it is recorded on a periodic basis. There are different methods used to calculate depreciation, like the straight line method and the double declining method. An asset may be used fully over its useful life or may be disposed of. When the asset is sold or exchanged for another asset, it may give rise to a gain or loss depending upon the price at which it is sold. The gain or loss is calculated by comparing the price at which it is sold with the written down value of the asset. (a) To prepare: To prepare journal entry to update depreciation for 2018.

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Chapter 10, Problem 15BE

To determine

Depreciation: Depreciation is a reduction in the value of a fixed asset over its useful life due to usage or wear and tear. Depreciation is an expense and it is recorded on a periodic basis. There are different methods used to calculate depreciation, like the straight line method and the double declining method. An asset may be used fully over its useful life or may be disposed of. When the asset is sold or exchanged for another asset, it may give rise to a gain or loss depending upon the price at which it is sold. The gain or loss is calculated by comparing the price at which it is sold with the written down value of the asset.

(a)

To prepare: To prepare journal entry to update depreciation for 2018.

To determine

(b)

To prepare: To prepare journal entry to record the sale.

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