The Bacon Company acquired new machinery with a price of $13,166 by trading in similar old machinery and paying $11,849.40. The old machinery originally cost $8,904 and had accumulated depreciation of $7,123.20. In recording this transaction, what should Bacon Company record? a.the new machinery at $11,849.40 b.a loss of $464.20 c.the new machinery at $11,385.20 d.a gain of $464.20
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.
The Bacon Company acquired new machinery with a price of $13,166 by trading in similar old machinery and paying $11,849.40. The old machinery originally cost $8,904 and had
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