More wrong answers here...


H

hi

Exchanges...

Liberty Corp owns a machien that originally cost $200,000, upon which there
is accumulated depreciation of $140,000.

A. The machine and cash of $80,000 are given for a new machine that fulfills
the same function and has a far value of $120,000.

Correct Answer:

Loss Dr. 20,000
New Machine Dr. 120,000
Cash Cr. 80,000
Old Mach Cr. 60,000

Just as I had answered. However, someone told me that I had to debit
"accumlated depreciation" for $140,000 and record the old machine at
200,000. Why why why? Why don't you debit accumulated depreciation?

--
 
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S

Steve

hi said:
Exchanges...

Liberty Corp owns a machien that originally cost $200,000, upon which there
is accumulated depreciation of $140,000.

A. The machine and cash of $80,000 are given for a new machine that fulfills
the same function and has a far value of $120,000.

Correct Answer:

Loss Dr. 20,000
New Machine Dr. 120,000
Cash Cr. 80,000
Old Mach Cr. 60,000

Just as I had answered. However, someone told me that I had to debit
"accumlated depreciation" for $140,000 and record the old machine at
200,000. Why why why? Why don't you debit accumulated depreciation?

I believe the entry "old machine Cr. 60,000" is "condensed" !!
 
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C

Chris Luper

Why why why? Why don't you debit accumulated depreciation?

You do debit accumulated depreciation. The accumulated depreciation of an
asset is tied to the asset. When that asset is off your books, the
accumulated depreciation is automatically reversed.
 

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