Question
In: Accounting
Alteran Corporation purchased office equipment for $1.7 million at the beginning of 2019. The equipment is...
Alteran Corporation purchased office equipment for $1.7 million
at the beginning of 2019. The equipment is being depreciated over a
10-year life using the double-declining-balance method. The
residual value is expected to be $800,000. At the beginning of 2021
(two years later), Alteran decided to change to the straight-line
depreciation method for this equipment.
Prepare the journal entry to record depreciation for 2021.
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Do not
round intermediate calculations. Enter your answers in whole
dollars.)
Solutions
Expert Solution
Journal Entries In the Books Of Alteran Corporation
| Date | Account Head & Explanation | Debit | Credit |
| 01 | Depreciation A/c.....Dr | $36,000 | |
| Accumlated Depreciation A/c | $36,000 | ||
| Depreciation Charged on Office . | |||
Working
Purchase Price of Offie - $ 1,700,000
Life of Office - 10Year
Residual Value - $ 800,000
Double Declining Rate = 100% /Estimated Life *2
= 100%/10*2 = 20%
Assets value in 2019 = 1,700,000
Less - Depreciation Charged @ 20% of 1700000 = (340,000)
Balance In 2020 = 1,360,000
Depreciation Charged @ 20%of 1360000 = (272,000)
Balance In 2021 = 1,088,000
Now Method of Depreciation Changes Here from Double Declining Rate Method to Straight Line Method
Now Value of Assets = 10,88,000
Estimated Life = 8 Years (because 2 Years already pased )
Residual value = 800,000
Now Depreciation for Year 2021 = Cost of Asset -Residual Value / Estimated Life in year
= 1,088,000-800,000/8 = 36000
ekkarill92 answered 1 year agoRelated Solutions
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