Squirrel Co. purchases equipment with a cost of $20,000 and a trade-in value of $2,000. Squirrel...
Squirrel Co. purchases equipment with a cost of $20,000 and a trade-in value of $2,000. Squirrel Co. estimates that the equipment will have a useful life of 5 years. Assuming Squirrel Co. records depreciation for the entire year, the adjusting entry would be recorded as
Select one:
a. 
b. 
c. 
d. 
Homework Answers
The depreciable value is 20,000-2,000 = $18,000 (Cost less Residual Value)
Depreciation for one year is 18,000/5 = $3,600 (Based on Useful life or SLM method)
The adjustment entry would be depreciation debit with $ 3,600 and equipment credit $3,600.
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