Wardell Company purchased a mainframe on January 1, 2019, at a cost of $50,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $5,000. On January 1, 2021, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $1,400. Required: 1. Prepare the year-end journal entry for depreciation in 2021. No depreciation was recorded during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answer to nearest whole dollar.) 2. Prepare the year-end journal entry for depreciation in 2021. Assume that the company uses the sum-of-the-years' -digits method instead of the straight-line method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
Wardell Company purchased a mainframe on January 1, 2019, at a cost of $50,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $5,000. On January 1, 2021, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $1,400. Required: 1. Prepare the year-end journal entry for depreciation in 2021. No depreciation was recorded during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answer to nearest whole dollar.) 2. Prepare the year-end journal entry for depreciation in 2021. Assume that the company uses the sum-of-the-years' -digits method instead of the straight-line method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Wardell Company purchased a mainframe
on January 1, 2019, at a cost of $50,000.
The computer was depreciated using the
straight-line method over an estimated
five-year life with an estimated residual
value of $5,000. On January 1, 2021, the
estimate of useful life was changed to a
total of 10 years, and the estimate of
residual value was changed to $1,400.
Required:
1. Prepare the year-end journal entry for
depreciation in 2021. No depreciation was
recorded during the year. (If no entry is
required for a transaction/event, select
"No journal entry required" in the first
account field. Round your final answer to
nearest whole dollar.)
2. Prepare the year-end journal entry for
depreciation in 2021. Assume that the
company uses the sum-of-the-years' -digits
method instead of the straight-line
method. (If no entry is required for a
transaction/event, select "No journal entry
required" in the first account field. Do not
round intermediate calculations. Round
your final answers to nearest whole
dollar.)
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