2. A building is purchased on June 1, 2019, and has a value of $360,000. Assume that the Declining Balance Method of Depreciation is used: a) Calculate the Depreciation Expense for the first year of ownership of this building if the fixed percentage allowed for buildings is 5%. b) Write the adjusting journal entry, dated June 31, 2019, to record the depreciation expense for the month of June. c) Show the Fixed Assets section of the Balance Sheet at June 31, 2019. d) Write the adjusting journal entry, dated June 31, 2020, to record the depreciation expense for the month of June. e) Show the Fixed Assets section of the Balance Sheet at June 31, 2020.
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.
2. A building is purchased on June 1, 2019, and has a value of $360,000. Assume that the
Declining Balance Method of
a) Calculate the Depreciation Expense for the first year of ownership of this building if
the fixed percentage allowed for buildings is 5%.
b) Write the
expense for the month of June.
c) Show the Fixed Assets section of the
d) Write the adjusting journal entry, dated June 31, 2020, to record the depreciation
expense for the month of June.
e) Show the Fixed Assets section of the Balance Sheet at June 31, 2020.
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