Falcetto Company acquired equipment on January 1, 2013, for $12,000. Falcetto elects to value this class of equipment using revaluation accounting. This equipment is being depreciated on a straight-line basis over its 6-year useful life. There is no residual value at the end of the 6-year period. The appraised value of the equipment approximates the carrying amount at December 31, 2013 and 2015. On December 31, 2014, the fair value of the equipment is determined to be $7,000.
Instructions
(a) Prepare the journal entries for 2013 related to the equipment.
(b) Prepare the journal entries for 2014 related to the equipment.
(c) Determine the amount of depreciation expense that Falcetto will record on the equipment in 2015?