Question

Brief Exercise 11-07

Crane Company purchased a computer for $8,080 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,010 salvage value. On January 1, 2021, the estimates are revised. Crane now feels the computer will be used until December 31, 2022, when it can be sold for $505.

Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.)

Depreciation expense, 2021

$

PLEASE SHOW ALL WORK.

Answer 1

Depreciation for 2021= $2,373.50 or 2374.

Working

Straight line Method for 2019 till 2019 to 2020
A	Cost	$ 8,080
B	Residual Value	$ 1,010
C=A - B	Depreciable base	$ 7,070
D	Life [in years left ]	5
E=C/D	Annual SLM depreciation	$               1,414.00

.

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
2019	$            8,080.00	$               1,414.00	$                1,414.00	$                 6,666.00
2020	$            6,666.00	$               1,414.00	$                2,828.00	$                 5,252.00

.

Straight line Method - for 2021
A	Cost	$ 5,252
B	Residual Value	$ 505
C=A - B	Depreciable base	$ 4,747
D	Life [in years left ] (4-2)	2
E=C/D	Annual SLM depreciation	$               2,373.50