Question

Blue Company purchased a computer for $9,760 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,220 salvage value. In 2021, the estimates are revised. Blue now feels the computer will be used until December 31, 2022, when it can be sold for $610. Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.) Depreciation expense, 2021

explanation very appreciated

Answer 1

	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR COMPUTER
	Purchase Cost of Computer	$                        9,760
	Less: Salvage Value	$                        1,220
	Net Value for Depreciation	$                        8,540
	Usefule life of the Assets (In Years )	$                                5	Years
	Depreciation per year = Value for Depreciation / 5 years =	$                        1,708
	CALCULATION OF BOOK VALUE AS ON DECEMBER 31 2020
	Purchase Cost of Computer	$                        9,760
	Less: Depreciation for the year 2019	$                        1,708
	Less: Depreciation for the year 2020	$                        1,708
	Book Value as on Dec 31, 2020	$                        6,344
	CALCULATION OF REVISE DEPRECIATION
	Book Value as on Dec 31, 2020	$                        6,344
	Less: Salvage Value	$                            610
	Net Value for Depreciation	$                        5,734
	Remainning Usefule life of the Assets (In Years )	$                                2	Years
	Depreciation per year = Value for Depreciation / 2 years =	$                        2,867
	Answer = Depreciaiton for year 2021 = $ 2,867