Wardell Company purchased a minicomputer on January 1, 2022, at a cost of $57,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $6,000. On January 1, 2024, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $1,200. Required: 1. Prepare the year-end journal entry for depreciation on December 31, 2024. No depreciation was recorded during the year. Record depreciation expense for 2024. Event General Journal Debit Credit 1 Depreciation expense 4,425 Accumulated depreciation—computer 4,425 Prepare the year-end journal entry for depreciation on December 31, 2024. Assume that the company uses the double-declining-balance method instead of the straight-line method. Event General Journal Debit Credit 1 Depreciation expense Accumulated depreciation—computer
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Wardell Company purchased a minicomputer on January 1, 2022, at a cost of $57,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $6,000. On January 1, 2024, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $1,200.
Required:
1. Prepare the year-end
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Prepare the year-end journal entry for depreciation on December 31, 2024. Assume that the company uses the double-declining-balance method instead of the straight-line method.
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