Question

10. On November 5, 2019, Nillis purchased equipment by issuing a 2 year, non-interesting bear note for $30,000. The equipment has a useful life of 9 years with no salvage value. The list value of the equipment was $42,000

Show journal Entries, Amortization schedule and deprecation

Answer 1

Journal entries

Equipment a/c.......dr $30000

To non interest bearing note a/c. $30000

Value of asset to be taken as lower of fair value of asset or consideration paid for asset.

Depreciation = cost less salvage value divided by useful life

Depreciation =( $30000 - 0 ) ÷ 9

= 3333 per year

Depreciation is $4667 per year.

Depreciation a/c.......dr $3333

To equipment a/c $3333

Profit and loss a/c...dr $3333

Depreciation a/c $3333

Amortization table :-

Year	book value	depreciation	carry forward value
1	30000	3333	26667
2	26667	3333	23334
3	23334	3333	20001
4	20001	3333	16668
5	16668	3333	13335
6	13335	3333	10002
7	10002	3333	6669
8	6669	3333	3336
9	3336	3336 (b/f)	0