On January 2, 2014, Shine Lights purchased showroom fixtures for $18,000 cash, expecting the fixtures to remain
Question:
On January 2, 2014, Shine Lights purchased showroom fixtures for $18,000 cash, expecting the fixtures to remain in service for five years. Shine Lights has depreciated the fixtures on a straight-line basis, with zero residual value. On March 31, 2015, Shine Lights sold the fixtures for $5,000 cash. Record both the depreciation expense on the fixtures for 2015 and the sale of the fixtures on March 31, 2015.
Step by Step Answer:
Journal DATE ACCOUNTS POST REF DR CR 2015 March 31 DepreciationE...View the full answer
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
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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