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Refer to the information in CP 8-4 and 8-7. Assume that on May 31, 2019 Mayr traded

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Refer to the information in CP 8-4 and 8-7. Assume that on May 31, 2019 Mayr traded in the machine on an improved model with a listed selling price of $150,000. The company received a trade-in allowance of $100,000 on the old machine. The fair value of the old machine was $95,000.
Required: Prepare the journal entry to record the trade-in on the equipment. Assume the straight-line method of depreciation is used.
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Equipment 145000 3 Accumulated Depreciation 50625 E...View the full answer


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Accounting Introduction To Financial Accounting

Accounting Introduction To Financial Accounting

ISBN: 9781517089719

1st Edition

Authors: Henry Dauderis, David Annand

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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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