- January 26, 2020 at 5:33 am
I have confusion in this question.
Evan co purchased a machine with an estimated useful life 10 years for $76000 on 30 september 20×5 l.the machine had a residual value of $16000.
What are the ledger enteries to record the depreciation charge for the machine in the year ended 30 september 20×8?
The correct answer is :
Debit depreciation charge $6000
Credit accumulated depreciation $6000
But i calculate it as
Dep’n=(76000-16000)/10 *3 =18000.
So ledger enter would be
Debit accumulated depericiation18000
Credit non current asset 18000January 26, 2020 at 10:24 am
You have calculated the total (accumulated) depreciation at the end of three years (which would appear in the SOFP).
However the question is not asking for this. It is asking for the expense just for the year ended 30 September 20X8 which is just the one years expense of 6,000.
Also, we never debit accumulated depreciation and credit the non-current asset account anyway!! We keep them as two separate accounts always.
I do suggest that you watch my free lectures on this. The lectures are a complete free course for Papwer FA and cover everything needed to be able to pass the exam well.
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