A business will purchase fixed assets to use in the business over a long period of time. The benefits of fixed assets, such as machines, buildings or vehicles, are consumed over that time period. For example, the benefits of the vehicle are consumed over the life of the vehicle. Thus, if a vehicle is used for earning revenues, such as making deliveries, then both the revenues and the consumed benefits of the vehicle should be recognized in the same accounting period. Thus, the consumed benefit is accounted for periodically using an adjusting entry. The adjusting entry does not measure the loss in actual value of the fixed asset over time, but rather assigns a portion of the original cost to each time period of use. This is an example of The difference between the cost of the fixed asset and the accumulated depreciation is the book value of equipment. Recording in the Accounting System The adjusting entry to record the use over time does not reduce the fixed asset account directly, but instead uses a account called Lawson Manufacturing purchased equipment on January 1, 2014 for $50,000. Depreciation for 2014 was determined to be $6,000. Journalize the depreciation adjusting entry. December 31, 2014 What is the book value of equipment on December 31, 2014? $

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter1: Accounting And The Financial Statements

Section: Chapter Questions

Problem 2MCQ

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would you please help me with the questions attached? thank you

Understanding the Business Transaction
A business will purchase fixed assets to use in the business over a long period of time. The benefits of
fixed assets, such as machines, buildings or vehicles, are consumed over that time period. For example,
the benefits of the vehicle are consumed over the life of the vehicle. Thus, if a vehicle is used for earning
revenues, such as making deliveries, then both the revenues and the consumed benefits of the vehicle
should be recognized in the same accounting period.
Thus, the consumed benefit is accounted for periodically using an adjusting entry. The adjusting entry
does not measure the loss in actual value of the fixed asset over time, but rather assigns a portion of the
original cost to each time period of use. This is an example of
The difference between the cost of the fixed asset and the accumulated depreciation is the book value of
equipment.
Recording in the Accounting System
The adjusting entry to record the use over time does not reduce the fixed asset account directly, but
instead uses a
account called
Lawson Manufacturing purchased equipment on January 1, 2014 for $50,000. Depreciation for 2014 was
determined to be $6,000.
Journalize the depreciation adjusting entry.
December 31, 2014
What is the book value of equipment on December 31, 2014?

Financial Statement Inmpact
Haney Furniture purchased a delivery truck on January 1, 2014 for $60,000. The financial statement
impact of the annual depreciation adjusting entry is illustrated using a slider that assumes different
amounts for the annual depreciation.
Click here to answer the following questions using the depreciation slider and your understanding of the
depreciation adjustment process. If an answer is zero, enter "0".
1. The book value of the delivery equipment will be
over time.
2. The accumulated depreciation of the delivery equipment will be
over time.
If the annual depreciation is $15,000, the book value of the delivery equipment on December 31,
3.
2014 would be $
the accumulated depreciation
The depreciation expense for 2014 will be
4.
balance on December 31, 2015.
If the annual depreciation were $5,000, the accumulated depreciation balance on January 1, 2014
5.
would be $
If the annual depreciation were $10,000, the accumulated depreciation balance on December 31,
6.
2014 would be $

Expert Solution

Step 1

Depreciation is the decrease in value of an used in the business.

Journal entry is a record of financial transactions in the books of accounts of a business. It contains debit and credit columns along with narration.

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