LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12 years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account for depreciation. What is the journal entry on December 31, 2016 to record the yearly depreciation? Select one: a. Debit depreciation expense $5,000; Credit Equipment $5,000 b. Debit depreciation expense $5,333; Credit Accumulated depreciation: $5,333 c. Debit depreciation expense $5,000; Debit accumulated depreciation: $5,000 d. Debit depreciation expense $5,000; Credit Accumulated depreciation: $5,000
LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12 years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account for depreciation. What is the journal entry on December 31, 2016 to record the yearly depreciation? Select one: a. Debit depreciation expense $5,000; Credit Equipment $5,000 b. Debit depreciation expense $5,333; Credit Accumulated depreciation: $5,333 c. Debit depreciation expense $5,000; Debit accumulated depreciation: $5,000 d. Debit depreciation expense $5,000; Credit Accumulated depreciation: $5,000
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 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...
Related questions
Concept explainers
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.
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning