Question

Current Attempt in Progress On July 1.2019. Carla Vista Co, purchased new equipment for $90,000. Its estimated useful life was 8 years with a $10,000 salvage value. On December 31, 2022, the company estimated that the equipment's remaining useful life was 10 years, with a revised salvage value of $5,000. Prepare the journal entry to record depreciation on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Depreciation Expense 8000 Accumulated Depreciation-Equipment eTextbook and Media List of Accounts Prepare the journal entry to record depreciation on December 31, 2020. (Credit account titles are automatically indented when amount is! entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media

Answer 1

Journal entry on 31 December, 2019:

Account titles	Debit	Credit
Depreciation expense	$5000
To accumulated depreciation - equipment		$5000
(being depreciation expense recorded)

Amount of depreciation expense recorded on 31 December 2019:

Depreciation expense per year = (cost - salvage) /useful life.

= ($90000 - $10000)/8

= $80000 / 8

= $10000 per year.

But the equipment purchased on July 1,2019. That means the depreciation expense can't be recorded for full year.

So number of months from 1 July 2019 to 31 December 2019 is 6 months.

So depreciation expense = ($10000/12)×6 = $5000.

Journal entry on December 31, 2020:

Accounts titles	Debit	Credit
Depreciation expense	$10000
To accumulated depreciation - equipment		$10000
(being depreciation expense recorded)

Journal entry on 31december 2022:

Account titles	Debit	Credit
Depreciation expense	$6000
To accumulated depreciation - equipment		$6000
(being depreciation expense recorded)

Depreciation expense recorded on 31 December, 2022:

= (book value of equipment on 31 December 2022 - revised salvage) remaining useful life.

Where,

Book value = $90000 - $5000 - $10000 - $10000 = $65000

Depreciation expense = ($65000 - $5000)/10

= $60000/10

= $6000

Accumulated depreciation - equipment after recording depreciation on 31 December, 2022 = $5000 + $10000 +$10000 + $6000 = $31000