In 2018,New Wave Inc.(NW)set up a new manufacturing facility in Manitoba.To encourage NW to set up its factory,the province provided equipment with a fair value of $75,000 and an estimated useful life of 10 years using straight-line depreciation.What journal entry would be required to record the equipment contribution in fiscal 2018,using the net method?

Question

Quizplus · Accepted Answer

The contribution of equipment with a fair value of $75,000 and an estimated useful life of 10 years is a capital asset and should be recorded as property, plant, and equipment in the balance sheet. Hence, the journal entry to record the equipment contribution in fiscal 2018, using the net method, would be a credit to Property, Plant and Equipment for $75,000.