A. Prepare a depreciation schedule for the asset’s entire useful life using each of the following methods: Straight Line Production (Units of Production) Double Declining Balance B. Prepare the journal entry to record depreciation expense for year 2 for each of the Depreciation Methods (a total of 3 journal entries). C. Assume that the company decided to sell the equipment in year 3 for $85,000 in cash. Prepare the required journal entry for each of the Depreciation Methods (a total of 3 journal entries).
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.
Kk.308.
On January 2, 2021, Cohen Incorporated purchased machinery that cost $150,000 with a residual value of $15,000. The expected useful life of the machinery is 6 years and 13,500 units. It is expected to produce 2,000 units in year 1; 2,500 units in year 2; 3,000 units in year 3; 2,500 units in year 4; 2,500 units in year 5; and 1,000 units in year 6.
A. Prepare a
Straight Line
Production (Units of Production)
Double Declining Balance
B. Prepare the
C. Assume that the company decided to sell the equipment in year 3 for $85,000 in cash. Prepare the required journal entry for each of the Depreciation Methods (a total of 3 journal entries).
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