Question

On January 1, 2018, Poultry Processing Company purchased a freezer and related installation equipment for $42,000....

On January 1, 2018, Poultry Processing Company purchased a freezer and related installation equipment for $42,000. The equipment had a three-year estimated life with a $3,000 salvage value. Straight-line depreciation was used. At the beginning of 2020, Poultry Processing revised the expected life of the asset to four years rather than three years. The salvage value was revised to $2,000.

Required

Compute the depreciation expense for each of the four years, 2018–2021.

deprecial expense
2018
2019
2020
2021
Business   Accounting   
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Answer #1
Cost of assets 42000
Less: Salvage 3000
Depreciable cost 39000
Divide: Life 3
Annual depreciation 13000
Accumulated dep for 2 yrs = 13000*2 = 26000
Book value on Jan 012020 16000
Less: Revised salvage value 2000
Revised depreciable cost 14000
Divide: Remaining revised life 2
Annual depreciation 7000
Depreciation
2018 13000
2019 13000
2020 7000
2021 7000
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