In: Accounting
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
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 |
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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 |
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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 |