To Record Depreciation on Factory Equipment, the Needed Journal Entry

question 73

Multiple Choice

To record depreciation on factory equipment, the needed journal entry would include a

• A)credit to manufacturing overhead.
• B)debit to work in process inventory.
• C)credit to accumulated depreciation.
• D)debit to depreciation expense.

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Definitions:

Financial Leases

Covers the entire expected life of the equipment; does not provide for maintenance service, is not cancellable, and is fully amortized.

NPV

Net Present Value; a calculation used to determine the value of a project or investment by discounting future cash flows to the present.

NAL

NAL, or Net Advantage to Leasing, is a calculation used to determine the financial benefits, if any, of leasing an asset compared to purchasing it outright.

Lease-Versus-Purchase Analysis

A financial comparison to determine whether leasing or purchasing assets is more cost-effective for a business.