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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Depreciation and Disposal of Fixed Assets

Stanley Company reported the following information regarding its equipment:

Chapter 7, Problem 60E, Depreciation and Disposal of Fixed Assets Stanley Company reported the following information

Required:

1. What journal entry did Stanley make to record depreciation expense for 2019?

2. What journal entry did Stanley make to record the disposal of the equipment?

To determine

Concept introduction:

Depreciation:

Fixed assets play a major in the contribution of revenue to the company and they are significant for the efficient and continuous operation of the day to the day business. Depreciation is the process in which the cost of the fixed assets other than land is allocated to expense over the useful life of the asset.

Requirement 1:

Prepare journal entry to record depreciation expense for 2019.

Explanation

To prepare journal entry first we have to determine the depreciation expense. As per the given information the accumulated depreciation on Jan 1 2019 is 224350 and the accumulated depreciation on Dec 31 2019 is 257690. Thus the depreciation expense is calculates as:

Depreciation ex...

To determine

Concept introduction:

Disposal of fixed assets:

Fixed assets are disposed by a company either voluntarily or involuntarily. Voluntary disposal occurs when the useful life of the asset is over or due to technological obsolescence. Involuntary disposal occurs due to damage from fire, theft or natural calamities.

Requirement 2:

To explain:

Prepare journal entry to record depreciation expense for 2019.

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