The company has only one fixed asset (equipment) that is purchased at the start of this...

The company has only one fixed asset (equipment) that is purchased at the start of this year. That asset had cost $54,000, had an estimated life of 7 years, and is expected to be valued at $10,600 at the end of the 7 years.

Depreciation Expense Accumulated Depreciation: Equipment

Expert Solution

Accumulated depreciation Equipment

Step 1: The current account balance equals is $0.
as this is the first year of machine purchased accumulated depreciation is 0

Step 2: The current account balance should equal: $6,200, $6,200

at the end of the first year, Accumulated Depreciation Account balance
         = (Cost - salvage value) / life of asset
                    = $54,000-10,600 / 7years
                   = $6,200

Step 3: Adjusting journal entry to get from Step 1 to Step 2:

adjusting entry to record accumulated depreciation (to get from Step 1 to Step 2:)

Depreciation Expense Equipment - Cr. ................... $6,200
Accumulated Depreciation Equipment - Dr........................ $6,200

ekkarill92 answered 2 years ago

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