Question

Optical equipment is purchased on December 1, 2018 for $7,500.00 The useful life for
this fixed asset is five years, with a salvage value of $1,500.00. A new computer is also
purchased on December 1, 2018 for $1,800.00. The useful life for this fixed asset is three
years with a salvage value of $50.00.
What will be the general journal entry to record depreciation on December 31, 2018
by using the straight-line method?

Answer 1

Answer

• Working for Optical Equipment

A	Cost	$              7,500.00
B	Residual Value	$              1,500.00
C=A - B	Depreciable base	$              6,000.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$              1,200.00

--No. of month asset used in 2018 = 1 month [December].
--Depreciation expense = 1200 x 1 month/12 months = $ 100

• Working for Computer

A	Cost	$              1,800.00
B	Residual Value	$                    50.00
C=A - B	Depreciable base	$              1,750.00
D	Life [in years]	3
E=C/D	Annual SLM depreciation	$                  583.33

--No. of month asset used in 2018 = 1 month [December].
--Depreciation expense = 583.333 x 1 month/12 months = $ 48.61

• Journal Entry

Date	Accounts title	Debit	Credit
31-Jan-18	Depreciation expense – Equipment [$ 100 + $ 48.61]	$            148.61
	Accumulated Depreciation - Equipment		$        148.61
	(depreciation expense recorded)