Prepare the necessary journal entries to record the following transactions in 2013 for the Hoover Company. April 13 - Sold a delivery truck for $7,000. The delivery truck originally cost $45,000 and had accumulated depreciation of $41,000 on the date of sale. Assume the depreciation on the truck has already been recorded for the current year. May 13 - Discarded old mixing equipment that originally cost $100,000 and had a book value of $14,000 on the date of disposal. Assume depreciation on the equipment has already been recorded for the current year. Oct. 13 - Sold a toaster for $5,000. The toaster originally cost $30,000 and had accumulated depreciation of $22,000 on the date of sale. Assume the depreciation on the toaster has already been recorded for the current year.
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.
Prepare the necessary
April 13 - Sold a delivery truck for $7,000. The delivery truck originally cost $45,000 and had
May 13 - Discarded old mixing equipment that originally cost $100,000 and had a book value of $14,000 on the date of disposal. Assume depreciation on the equipment has already been recorded for the current year.
Oct. 13 - Sold a toaster for $5,000. The toaster originally cost $30,000 and had accumulated depreciation of $22,000 on the date of sale. Assume the depreciation on the toaster has already been recorded for the current year.
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