Here are selected 2022 transactions of Blue Spruce Company. Jan. 1 Retired a piece of machinery that was purchased on January 1, 2012. The machine cost $62,400 and had a useful life of 10 years with no salvage value. June 30 Sold a computer that was purchased on January 1, 2019. The computer cost $42,900 and had a useful life of 5 years with no salvage value. The computer was sold for $15,100 cash. Dec. 31 Discarded a delivery truck that was purchased on January 1, 2018. The truck cost $35,340. It was depreciated based on a 6-year useful life with a $3,000 salvage value. 1. Journalize all entries required on the above dates, including entries to update depreciation on assets disposed of where applicable. Blue Spruce Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2021.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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.
Here are selected 2022 transactions of Blue Spruce Company.
| Jan. | 1 | Retired a piece of machinery that was purchased on January 1, 2012. The machine cost $62,400 and had a useful life of 10 years with no salvage value. | |
| June | 30 | Sold a computer that was purchased on January 1, 2019. The computer cost $42,900 and had a useful life of 5 years with no salvage value. The computer was sold for $15,100 cash. | |
| Dec. | 31 | Discarded a delivery truck that was purchased on January 1, 2018. The truck cost $35,340. It was depreciated based on a 6-year useful life with a $3,000 salvage value. |
1. Journalize all entries required on the above dates, including entries to update
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