Harbourline Logistics’ truck cost 90,000 on 1 January 2022, residual 10,000, five-year life, straight line. Depreciation has been recorded to 31 December 2024. Record the depreciation needed to bring the truck up to date at 30 September 2025, the disposal date.
Harbourline Logistics’ truck cost 90,000 on 1 January 2022, residual 10,000, five-year life, straight line. Depreciation has been recorded to 31 December 2024. Record the depreciation needed to bring the truck up to date at 30 September 2025, the disposal date.
Answer
Dr Depreciation Expense 12000; Cr Accumulated Depreciation—Truck 12000
Accounts - Depreciation Expense - Accumulated Depreciation—Truck - Truck - Cash - Loss on Disposal - Retained Earnings Annual depreciation (90,000 − 10,000) ÷ 5 = 16,000; nine months of 2025 = 16,000 × 9/12 = 12,000. Debit the expense, credit the contra-asset. The trap is crediting Truck: depreciation never reduces the cost account, which stays at 90,000 until the disposal entry removes it. Cash, the loss and Retained Earnings belong to later or to no entry at all.
LI §8.6; L1 §10.1, §10.2.5