Larkspur Company purchased a computer system for $78,800 on January 1, 2016. It
ID: 2519632 • Letter: L
Question
Larkspur Company purchased a computer system for $78,800 on January 1, 2016. It was depreciated based on a 8-year life and an $16,800 salvage value. On January 1, 2018, Larkspur revised these estimates to a total useful life of 4 years and a salvage value of $10,200. Larkspur uses straight-line depreciation. Prepare Larkspur’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.)
Explanation / Answer
Prepare Larkspur’s entry to record 2018 depreciation expense.
Original cost = 78800
Straight line dep = (78800-16800/8) = 7750 per year
Accumlated depreciation (2016 to 2017) = 7750*2 = 15500
2018 Dep = (78800-10200-15500)/2 = 26550
Date accounts & explanation debit credit Dec 31 2018 Depreciation expense 26550 Accumlated depreciation 26550 (To record depreciation)Related Questions
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