Brief Exercise 22-5
Pharoah Company purchased a computer system for $75,900 on
January 1, 2016. It was depreciated based on a 8-year life and an
$16,300 salvage value. On January 1, 2018, Pharoah revised these
estimates to a total useful life of 4 years and a salvage value of
$11,000. Pharoah uses straight-line depreciation.
Prepare Pharoah’s entry to record 2018 depreciation expense.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
Cost | 75900 | |
Less: Salvage value | 16300 | |
Depreciable cost | 59600 | |
Divide by useful life | 8 | |
Annual depreciation | 7450 | |
Depreciation for 2 years | 14900 | =7450*2 |
Book value on January 1, 2018 | 61000 | =75900-14900 |
Less: Salvage value | 11000 | |
Depreciable cost | 50000 | |
Divide by remaining useful life | 2 | |
Annual depreciation for last 2 years | 25000 | |
Debit | Credit | |
Depreciation expense | 25000 | |
Accumulated depreciation | 25000 |
Get Answers For Free
Most questions answered within 1 hours.