Question

# Alteran Corpration purchased office equipment for \$2.2 million in 2015. The equipment is being depreciated over...

Alteran Corpration purchased office equipment for \$2.2 million in 2015. The equipment is being depreciated over 8 year life using the sum of the years digits method. The residual value is expected to be \$700000. At the end of 2018. Alteran decided to change to the straight line depreciation method for this equipment.

Prepare the journal entry to record depreciation for 2018

Calculate Depreciation expenses for 2018 :

Sum of year digit = 8+7+6+5+4+3+2+1 = 36

 Original cost 2200000 Less: Salvage value (700000) Depreciable Base 1500000 2015 dep (1500000*8/36) (333333) 2016 Dep (1500000*7/36) (291667) 2017 dep (1500000*6/36) (250000) Net book value at the end of 2017 625000 Dep for 2018 (625000/5) 125000

Prepare the journal entry to record depreciation for 2018

 Date accounts & explanation debit credit 2018 Depreciation expenses 125000 Accumlated depreciation 125000 (To record depreciation)

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