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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

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Answer #1

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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