Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8
Question:
Computer equipment (office equipment) purchased 6 1/2 years ago for $170,000, with an estimated life of 8 years and a residual value of $10,000, is now sold for $60,000 cash. (Appropriate entries for depreciation had been made for the first six years of use.) Journalize the following entries:
(a) Record the depreciation for the one-half year prior to the sale, using the straight-line method.
(b) Record the sale of the equipment.
(c) Assuming that the equipment had been sold for $30,000 cash, prepare the entry for (b) above to record the sale.
Step by Step Answer:
a Computation of the journal Entry for recording the Dep...View the full answer
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina
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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