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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.)

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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


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