Bonita Company purchased a computer for $8,720 on January 1, 2019. Straight-line depreciation is used, based...

Bonita Company purchased a computer for $8,720 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,090 salvage value. In 2021, the estimates are revised. Bonita now feels the computer will be used until December 31, 2022, when it can be sold for $545. Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.) Depreciation expense, 2021

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Expert Solution

Depreciation for 2021 =$2,562

Working

Straight line Method for year 2019 and 2020
A	Cost	$ 8,720
B	Residual Value	$ 1,090
C=A - B	Depreciable base	$ 7,630
D	Life [in years left ]	5
E=C/D	Annual SLM depreciation	$ 1,526

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
2019	$ 8,720	$ 1,526	$ 1,526	$ 7,194
2020	$ 7,194	$ 1,526	$ 3,052	$ 5,668

Straight line Method -For 2021
A	Ending book value at December 31, 2020	$ 5,668
B	Residual Value	$ 545
C=A - B	Depreciable base	$ 5,123
D	Life [in years left ] (4-2=2)	2
E=C/D	Annual SLM depreciation	$ 2,562

ekkarill92 answered 1 year ago

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