A piece of equipment was purchased by Jonesy’s Ltd. on April 10, 2016 at a cost of $35,000. It is expected the equipment will be useful for 4 years and can be sold at that time for $3,000. The straight-line method of depreciation is used for the equipment, and the company records amortization annually at December 31. On January 1, 2019, the company decides to upgrade their operations, and they sell the equipment for proceeds of $11,000. Instructions: Record the disposal on January 1, 2019. (no explanations necessary)
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.
A piece of equipment was purchased by Jonesy’s Ltd. on April 10, 2016 at a cost of $35,000. It is expected the equipment will be useful for 4 years and can be sold at that time for $3,000. The straight-line method of
On January 1, 2019, the company decides to upgrade their operations, and they sell the equipment for proceeds of $11,000.
Instructions:
Record the disposal on January 1, 2019. (no explanations necessary)
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