Metals Inc. acquired metal recycling equipment acquired on January 3, 2003, at a cost of $240,000, with
Question:
a. What was the book value of the equipment at December 31, 2006, the end of the fiscal year?
b. Assuming that the equipment was sold on July 1, 2007, for $135,000, journalize the entries to record
(1) Depreciation for the six months until the sale date and
(2) The sale of the equipment.
Step by Step Answer:
a Cost of equipment 240000 Accumulated depreciation at December 31 2006 4 yea...View the full answer
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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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