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Revision of Depreciation On January 2, 2015, Moser, Inc., purchased equipment for $100,000. The equipment was...

Revision of Depreciation

On January 2, 2015, Moser, Inc., purchased equipment for $100,000. The equipment was expected to have a $10,000 salvage value at the end of its estimated six-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2019, Moser decided that the useful life of the equipment should be extended by three years and the salvage value decreased to $8,000.

a. Prepare a journal entry to record depreciation expense on the equipment for 2019. Round your answer to the nearest dollar.

b. What is the book value of the equipment at the end of 2019 (after recording the depreciation expense for 2019)?

Book Value at year ended December 31, 2019:

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Answer #1
Original Annual dep
Cost of Equipment 100000
Less: Salvage value 10000
Depreciable cost 90000
Divide: Life 6
Annual depreciation 15000
Accumulated dep fr 4 yrs upto 31.12.18 = 15000*4 = 60,000
Book value on 01.01.19 (100000-60000) 40000
Less: Revised salvage value 8000
Depreciable cost 32000
Divide: Revsied remaining life (2+3) 5
Annual depreciation 6400
Journal entry for depreciation
Date Accounts title and explanation Debit $ Credit $
31.12.19 Depreciation expenses 6400
       Accumulated depreciation-Equipment 6400
Book value on 01.01.19 (as computed above) 40000
Less: Depreciation fr 2019 6400
Book value as on 31.12.19 33600
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