Hi, i need help with this question, thanks u On January 1, Simms Delivery purchased a truck for $38,000. The truck has an estimated useful life of 5 years and a $3,000 expected salvage value. Simms uses the straight-line method. Hint: Think what kind of balance expenses have and what kind of balances contra-assets account have. Prepare the adjusting entry for depreciation on December 31 of the year. (Show all calculations below the entry.) Date Description Post Ref Debit Credit Adjusting Entries January 1 Truck 38,000 2. Compute the book value at the end of the second year of the truck’s useful life. (Show all calculations in your answer.)
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.
Hi, i need help with this question, thanks u
- On January 1, Simms Delivery purchased a truck for $38,000. The truck has an estimated useful life of 5 years and a $3,000 expected salvage value. Simms uses the straight-line method. Hint: Think what kind of balance expenses have and what kind of balances contra-assets account have.
- Prepare the adjusting entry for depreciation on December 31 of the year. (Show all calculations below the entry.)
Date Description Post Ref Debit Credit
|
|
||||
|
January 1 |
Truck |
38,000 |
||
2. Compute the book value at the end of the second year of the truck’s useful life. (Show all calculations in your answer.)
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