Question

Bramble Company purchased a computer system for $73,400 on January 1, 2019. It was depreciated based on a 7-year life and an $19,500 salvage value. On January 1, 2021, Bramble revised these estimates to a total useful life of 4 years and a salvage value of $10,500. Bramble uses straight-line depreciation.

Prepare Bramble’s entry to record 2021 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.)

Account Titles and Explanation	Debit	Credit
Enter an account title	Enter a debit amount	Enter a credit amount
Enter an account title	Enter a debit amount	Enter a credit amount

Answer 1

Cost of computer = $73,400

Salvage value = $19,500

Estimated useful life = 7 years

Annual depreciation expense = (Cost of machine - Salvage value)/Estimated useful life

= (73,400 - 19,500)/7

= 53,900/7

= $7,700

Accumulated depreciation for 2 years = Annual depreciation expense x 2

= 7,700 x 2

= $15,400

Book value at the end of year 2
Cost	73,400
Accumulated depreciation for 2 years	- 15,400
Book value at point of revision	$58,000

Book value at point of revision	58,000
Revised salvage value	- 10,500
Revised depreciable cost	$47,500
Remaining useful life	2 years
Annual depreciation for final 2 years	47,500/2 = 23,750

Journal

Dec. 31, 2021	Depreciation expense	23,750
	Accumulated depreciation - Computer		23,750

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