In: Accounting
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
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