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On 3 January 2014, Bennetti Ltd paid $33000 for a machine with a useful life of 10

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On 3 January 2014, Bennetti Ltd paid $33000 for a machine with a useful life of 10 years and a residual value of $3000. On 31 December 2018, accumulated depreciation on the machine was $15000. The machine was sold on 31 May 2019. Ignore GST.


Required

A. Prepare a general journal entry to record depreciation on the machine for the five months in 2019. Use the straight-line depreciation method

B. Prepare an entry to record the sale of the machine on 31 May 2019 assuming a selling price of:

1. $16000

2. $17800.

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A 2019 May 31 Depreciation Expense Machinery 1 250 Accumulated D...View the full answer


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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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