Crane Ltd. purchased an electric wax melter on April 30, 2023, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase: List price of new melter Cash paid Cost of old melter (5-year life, $690 residual value) Accumulated depreciation on old melter (straight-line) Market value of old melter in active secondary market Account Titles and Explanation $16,000 (To record depreciation expense to date of exchange) 6,500 12,690 7,200 Assuming that Crane's fiscal year ends on December 31 and depreciation has been recorded through December 31, 2022, prepare the journal entries that are necessary to record this exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) 6,080 Debit Credit
Crane Ltd. purchased an electric wax melter on April 30, 2023, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase: List price of new melter Cash paid Cost of old melter (5-year life, $690 residual value) Accumulated depreciation on old melter (straight-line) Market value of old melter in active secondary market Account Titles and Explanation $16,000 (To record depreciation expense to date of exchange) 6,500 12,690 7,200 Assuming that Crane's fiscal year ends on December 31 and depreciation has been recorded through December 31, 2022, prepare the journal entries that are necessary to record this exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) 6,080 Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...
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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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