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Brief Exercise 22-5 Pharoah Company purchased a computer system for $75,900 on January 1, 2016. It...

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.)

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Answer #1
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
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