Lila Company purchased a computer on January 2, 2011, at a cost of $2,500. The computer is
Question:
Lila Company purchased a computer on January 2, 2011, at a cost of $2,500. The computer is expected to have a useful life of five years and a residual value of $250.
Assume that the computer is disposed of on July 1, 2014. Record the depreciation expense for half a year and the disposal under the straight-line method under each of the following assumptions:
1. The computer is discarded.
2. The computer is sold for $400.
3. The computer is sold for $1,100.
Step by Step Answer:
2014 July 1 2014 July 2500 1Depreciation ExpenseComputer Accumu...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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