P9-7A Express Co. purchased equipment on March 1, 2012, for $95,000 on account. The equipment had an estimated useful life of five years, with a residual value of $5,000. The equipment is disposed of on February 1, 2015. Express Co. uses the diminishing-balance method of depreciation with a 20% rate and calculates depreciation for partial periods to the nearest month. The company has an August 31 year end. Instructions (a) Record the acquisition of the equipment on March 1, 2012. (b) Record depreciation at August 31, 2012, 2013, and 2014. (c) Record the disposal on February 1, 2015, under the following assumptions: 1. It was scrapped with no residual value.
P9-7A Express Co. purchased equipment on March 1, 2012, for $95,000 on account. The equipment had an estimated useful life of five years, with a residual value of $5,000. The equipment is disposed of on February 1, 2015. Express Co. uses the diminishing-balance method of depreciation with a 20% rate and calculates depreciation for partial periods to the nearest month. The company has an August 31 year end. Instructions (a) Record the acquisition of the equipment on March 1, 2012. (b) Record depreciation at August 31, 2012, 2013, and 2014. (c) Record the disposal on February 1, 2015, under the following assumptions: 1. It was scrapped with no residual value.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...
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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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