A business acquired equipment for $150,000 on January 1, 2015. The equipment wil

Question

A business acquired equipment for $150,000 on January 1, 2015. The equipment will be depreciated over five years of its useful life using the straight-line depreciation method. The business records depreciation once a year on December 31. Which of the following is the adjusting entry required to record depreciation on equipment for the year 2015? (Assume the salvage value of the acquired equipment to be zero.)

Debit $30,000 to Depreciation Expense and credit $30,000 to Equipment.

Debit $150,000 to Equipment and credit $150,000 to Cash.

Debit $30,000 to Depreciation Expense and credit $30,000 to Accumulated Depreciation.

Debit $150,000 to Depreciation Expense and credit $150,000 to Accumulated Depreciation.

Explanation / Answer

Debit $30,000 to Depreciation Expense and credit $30,000 to Equipment. SLM Cost of Machine         150,000.00 Salvage Value                           -   Life in years                      5.00 Particulars 2013 Opening Balance         150,000.00 Depreciation(150,000/5)            30,000.00 Closing balance         120,000.00 Journal Entries Particulars Dr Amt Cr Amt Depreciation Expense Dr            30,000.00 To Equipment                              30,000.00

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