A business purchased equipment for $150,000 on January 1, 2019. The equipment will be depreciated over the five years of its estimated 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 the equipment for the year 2019? (Assume the residual value of the acquired equipment to be zero.)

Question

Quizplus · Accepted Answer

Option A is incorrect because it is the initial purchase entry, not a depreciation entry.

Option B is incorrect because it gives the impression that depreciation has already been recorded in Accumulated Depreciation account. But, it is the first year of deprecation and no depreciation has been recorded yet.

Option D is also incorrect as it debits the wrong account.

Option C is the correct choice as it correctly debits Depreciation Expense-Equipment account and credits Accumulated Depreciation-Equipment account for $30,000. This will reduce the equipment's book value by $30,000 ($150,000 / 5 years), reflecting the wear and tear or usage of the equipment during the first year of use.

A Business Purchased Equipment for $150,000 on January 1, 2019