Details regarding Leroux Steel's purchases of plant and equipment items during 2020 follow: Plant and Equipment Item Machine A Machine B Estimated Sales Value at End of Estimated Useful Life $ 0 Machine C Date of Purchase a. Jan. 1 b. Apr. 1 c. Nov. 1 Cost $107,000 86,000 43,500 Estimated Useful life 5 years 4 years 2 years 4,400 3,900 Assume Leroux Steel uses the straight-line method to depreciate its assets. Required: Prepare the annual adjusting entry at December 31, 2020, Leroux's year-end, for each plant and equipment item.
Details regarding Leroux Steel's purchases of plant and equipment items during 2020 follow: Plant and Equipment Item Machine A Machine B Estimated Sales Value at End of Estimated Useful Life $ 0 Machine C Date of Purchase a. Jan. 1 b. Apr. 1 c. Nov. 1 Cost $107,000 86,000 43,500 Estimated Useful life 5 years 4 years 2 years 4,400 3,900 Assume Leroux Steel uses the straight-line method to depreciate its assets. Required: Prepare the annual adjusting entry at December 31, 2020, Leroux's year-end, for each plant and equipment item.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 7E
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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