Depreciation : It refers to the reduction in the monetary value of the fixed tangible assets over its useful life due to its wear and tear or obsolescence. In other words, it is the method of distributing the cost of tangible fixed assets over its estimated useful life. Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below: Depreciation cost = ( Cost of the asset − Salvage value ) Estimated useful life of the asset To record: the journal entry for the purchase of equipment on January 1.

Question

Want to see the full answer?

Answer 1

Question

Chapter 9, Problem 9.12E

(a)

To determine

Depreciation: It refers to the reduction in the monetary value of the fixed tangible assets over its useful life due to its wear and tear or obsolescence. In other words, it is the method of distributing the cost of tangible fixed assets over its estimated useful life.

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the salvage value is shown as below:

Depreciation cost = (Cost of the asset−Salvage value)Estimated useful life of the asset

To record: the journal entry for the purchase of equipment on January 1.

(b)

To determine

To record: the journal entry for the depreciation expense for the equipment sold on June 30, 2017

(c)

To determine

To record: the journal entry for the sale of Equipment on December 31.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A company purchased and installed equipment on January 1 at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a 5-year life and no salvage value. The equipment was disposed of on July 1 of the fourth year. The company's year-end is December 31. 1. Prepare the general journal entry to update depreciation to July 1 in the fourth year. 2. Prepare the general journal entry to record the disposal of the equipment under each of these three independent situations: a. The equipment was sold for $22,000 cash. (Remember to calculate accumulated depreciation. A full year of depreciation for the first 3 years and then the partial year for the fourth year calculated above). b. The equipment was sold for $15,000 cash. (Remember accumulated depreciation) c. The equipment was totally destroyed in a fire and the insurance company settled the claim for $18,000…

Equipment acquired on January 8 at a cost of $100,870, has an estimated useful life of 12 years, has an estimated residual value of $9,550, and is depreciated by the straight-line method. Assuming that the equipment was sold on April 1 of the fifth year for $61,657, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment. I have already determined the book value of the equipment at December 31 the end of the fourth year to be $70,430. $100,870 – $9,550/12 years = $7,610 $100,870 – 30,440 ($7,610 x 4 years) = $70,430 I need help with the journal entry. Thank you.

Morris Incorporated recorded the following transactions over the life of a piece of equipment purchased in Year 1: January 1, Year 1 Purchased equipment for $14,600 cash. The equipment was estimated to have a five-year life and $6,630 salvage value and was to be depreciated using the straight-line method. Recorded depreciation expense for Year 1. December 31, Year 1 September 30, Year 2 Undertook routine repairs costing $786. December 31, Year 2 Recorded depreciation expense for Year 2. January 1, Year 3 Made an adjustment costing $2,940 to the equipment. It improved the quality of the output but did not affect the life and salvage value estimates. December 31, Year 3 Recorded depreciation expense for Year 3. June 1, Year 4 Incurred $331 cost to oil and clean the equipment. December 31, Year 4 Recorded depreciation expense for Year 4. January 1, Year 5 December 31, Year 5 October 1, Year 6 Received and accepted an offer of $15,100 for the equipment. Required a. Use a horizontal…