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x Your answer is incorrect. Wildhorse Company purchased a computer for $9,440 on January 1, 2019. Straight-line depreciation

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Answer #1

Cost of equipment = $9,440

Residual value = $1,180

Useful life = 5 years

Annual depreciation = ( Cost of equipment - Residual value)/Useful life

= ( 9,440-1,180)/5

= $1,652

Accumulated depreciation on January 1, 2021 = Annual depreciation x 2

= 1,652 x 2

= $3,304

Book value of asset on January 1, 2021 = Cost of equipment - Accumulated depreciation on January 1, 2021

= 9,440-3,304

= $6,136

Revised remaining useful life = 2 years

Revised annual depreciation = Book value of asset on January 1, 2021/Revised remaining useful life

= 6,136/2

= $3,068

Depreciation expense for 2021 = $3,068

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