On March 1, 2017 green company purchased a new piece of equipment for $210,000 cash. On March 1 Green recorded the equipment purchase with a debit to the equipment account and a credit to the cash account. Green estimates that the equipment will last seven years. Green also estimates that at the end of seven years the equipment will have no future value and will be scrapped. Green uses the straight-line depreciation method. In the general journal below record the required March 31, 2017 adjusting journal entry for March’s depreciation of the equipment.
On March 1, 2017 green company purchased a new piece of equipment for $210,000 cash. On March 1 Green recorded the equipment purchase with a debit to the equipment account and a credit to the cash account. Green estimates that the equipment will last seven years. Green also estimates that at the end of seven years the equipment will have no future value and will be scrapped. Green uses the straight-line depreciation method. In the general journal below record the required March 31, 2017 adjusting journal entry for March’s depreciation of the equipment.
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 47P
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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.
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On March 1, 2017 green company purchased a new piece of equipment for $210,000 cash. On March 1 Green recorded the equipment purchase with a debit to the equipment account and a credit to the cash account. Green estimates that the equipment will last seven years. Green also estimates that at the end of seven years the equipment will have no future value and will be scrapped. Green uses the straight-line depreciation method.
In the general journal below record the required March 31, 2017 adjusting journal entry for March’s depreciation of the equipment.
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