contestada

Machinery purchased for $66,000 by Metlock Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.
Prepare the entry to record depreciation for 2021.

Respuesta :

Zviko

Answer:

Debit : Depreciation Expense   $4,510

Credit : Accumulated Depreciation $4,510

Explanation:

Straight line method charges a fixed amount of depreciation for the period the asset is used in the business.

Depreciation expense = (Cost - Residual Value) ÷ Estimated Useful life

therefore

Annual Depreciation Expense = ($66,000 -  $4,400) ÷ 8

                                                  = $7,700

2016

Annual Depreciation Expense = $7,700

2017

Annual Depreciation Expense = $7,700

2018

Annual Depreciation Expense = $7,700

2019

Annual Depreciation Expense = $7,700

2020

Annual Depreciation Expense = $7,700

2021

Beginning Accumulated depreciation Balance = $38,500

Calculate New Depreciable amount

Depreciable amount = Cost - Accumulated depreciation - New Salvage Value

                                   = $66,000 - $38,500 - $4,950

                                   = $22,550

Calculate New Useful Life

5 years have already expired so the remainder out of the new 10 years is 5 years

Calculate New Depreciation Expense

Depreciation Expense = $22,550 ÷ 5 = $4,510

ACCESS MORE
ACCESS MORE
ACCESS MORE
ACCESS MORE

Otras preguntas