On July 1, 2021, Masood Company purchases equipment for $30,000 cash. The company uses straight-line depreciation. It
Question:
On July 1, 2021, Masood Company purchases equipment for $30,000 cash. The company uses straight-line depreciation. It estimates the equipment will have a 10-year life. Masood Company has a December 31 year end.
a. Record the purchase of the equipment.
b. Calculate the amount of depreciation Masood Company should record for the year of the equipment purchase.
c. Prepare the adjusting journal entry for the equipment at December 31, 2021.
Step by Step Answer:
a July 121 Equipment 30000 Cash 30000 Purchased equipment for cas...View the full answer
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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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