Question

A company purchases a machine for its manufacturing facility for $190,000 in January and as of December has recorded only 11 months of depreciation. The machinery is estimated to have a useful life of 5 years. What is the proper entry to record the year-end adjustment for depreciation, assuming the straight-line method is used?

A company purchased a truck for $125,000 on January 1 and as of December has not recorded any depreciation. The truck is estimated to have a useful life of 5 years, and straight-line depreciation is used. What is the proper entry to record the year-end adjustment for depreciation?

PS: Please type answer

Answer 1

Part 1:

cost of machine = $190,000

Useful life = 5 years

Annual depreciation = Cost of machine / Useful life

= 190,000/5

= $38,000

Depreciation for 1 month = Annual depreciation x 1/12

= 38,000 x 1/12

= $3,167

General Journal	Debit	Credit
Depreciation expense	$3,167
Accumulated depreciation- Equipment		$3,167

Since II month depreciation has already been recorded, hence at December 31, only 1 month depreciation will be recorded.

Part 2

cost of truck = $125,000

Useful life = 5 years

Annual depreciation = Cost of truck/Useful life

= 125,000/5

= $25,000

General Journal	Debit	Credit
Depreciation expense	$25,000
Accumulated depreciation- Equipment		$25,000

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