Aloha Company is starting its new fiscal year on July 1. The company has owned a specialized piece of equipment for three years that it depreciates using the straight-line method. The equipment was estimated to have a useful life of seven years, and the company feels that this estimate is still reasonable. Which reversing entry should the company make on July 1 to reverse the adjusting entry recorded on June 30, the end of the fiscal year, for depreciation on the equipment? a.Debit Accumulated Depreciation—Equipment and credit Equipment b.Debit Accumulated Depreciation—Equipment and credit Depreciation Expense—Equipment c.No reversing entry should be recorded. d.Debit Depreciation Expense—Equipment and credit Accumulated Depreciation—Equipment
Aloha Company is starting its new fiscal year on July 1. The company has owned a specialized piece of equipment for three years that it depreciates using the straight-line method. The equipment was estimated to have a useful life of seven years, and the company feels that this estimate is still reasonable. Which reversing entry should the company make on July 1 to reverse the adjusting entry recorded on June 30, the end of the fiscal year, for depreciation on the equipment? a.Debit Accumulated Depreciation—Equipment and credit Equipment b.Debit Accumulated Depreciation—Equipment and credit Depreciation Expense—Equipment c.No reversing entry should be recorded. d.Debit Depreciation Expense—Equipment and credit Accumulated Depreciation—Equipment
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aloha Company is starting its new fiscal year on July 1. The company has owned a specialized piece of equipment for three years that it depreciates using the straight-line method. The equipment was estimated to have a useful life of seven years, and the company feels that this estimate is still reasonable. Which reversing entry should the company make on July 1 to reverse the adjusting entry recorded on June 30, the end of the fiscal year, for depreciation on the equipment?
a.Debit Accumulated Depreciation —Equipment and credit Equipment
b.Debit Accumulated Depreciation—Equipment and credit Depreciation Expense—Equipment
c.No reversing entry should be recorded.
d.Debit Depreciation Expense—Equipment and credit Accumulated Depreciation—Equipment
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