Nancy Castle Company purchased a computer system for $60,000 on Januar

QUESTION

Nancy Castle Company purchased a computer system for $60,000 on January 1, 2006. It was depreciated based on a 7-year life and an $18,000 salvage value. On January 1, 2008, Castle revised these estimates to a total useful life of 4 years and a salvage value of $10,000. Prepare Castles entry to record 2008 depreciation expense.
Purchase Cost $60,000.00 Salvage Value $18,000.00 Useful Life 7 Depreciation Expense = (Cost “ Salvage Value)/Useful life Depreciation Expense =(60000-18000)/7 Depreciation Expense $6,000.00 2 years Depreciation Expense = 6000*2 $12,000.00 WDV on 1 Jan 2008¦

ase Cost “ Depreciation (60000-12000= 48000) New Salvage Value $10,000.00 New useful life 4 Depreciation Expense = (Cost “ Salvage Value)/Useful life (48000-10000)/2 $19,000.00

ANSWER:

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