A business purchased 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.)

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Quizplus · Accepted Answer

The adjusting entry required to record depreciation on equipment for the year 2015 would be to debit $30,000 to Depreciation Expense-Equipment and credit $30,000 to Accumulated Depreciation-Equipment. This is because the equipment has a useful life of five years therefore the annual depreciation expense would be $150,000 / 5 = $30,000. Accumulated Depreciation-Equipment is a contra-asset account that is used to record the accumulated depreciation of the equipment over time. Depreciation expense reduces the net value of the asset, while accumulated depreciation offsets the total value of the asset to show its net book value.

A Business Purchased Equipment for $150,000 on January 1,2015