Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of
Question:
Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the case of assets acquired after the fifteenth day of the month, no depreciation should be considered for the month in which the asset was acquired.
REQUIRED
1. Calculate the depreciation expense for Johnson Machine as of December 31, 20--.
2. Prepare the entry for depreciation expense using a generaljournal.
Purchase Price Salvage Value Date Useful Life Asset Purchased Truck #1 January 1 April 10 May 1 June 18 September 1 $20,000 8 years $4,000 4,000 3,000 2,000 Tractor #1 Tractor #2 18,000 14,000 10 Forklift 40,000 4,000
Step by Step Answer:
1 Truck 1 20000 4000 2000 8 years Truck 2 24000 4000 2...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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