Question

Liberty bicycles is recording depreciation on its manufacturing equipment. in doing so, liberty should:___. beselect answer from the options below

a. debiting its accumulated depreciation - equipment account.
b. debiting its equipment account directly.
c. crediting its equipment account directly.
d. crediting its accumulated depreciation - equipment account.

Answer 1

Liberty Bicycles should credit its accumulated depreciation - equipment account when recording depreciation, which corresponds to option d from the choices given.

Step-by-step explanation:

When Liberty Bicycles is recording depreciation on its manufacturing equipment, the correct accounting treatment is to credit the account where the cumulative depreciation is accumulated over the life of the equipment. Therefore, the correct option from the ones provided is d. crediting its accumulated depreciation - equipment account. This entry increases the accumulated depreciation account and recognizes the expense through a debit to the depreciation expense account, reflecting the usage of the equipment over time. It is important to note that the original cost of the equipment remains unchanged in the equipment account until disposal of the asset.