Question

Danish Inc purchased a computer on January 1, 2019, for $1,600,000. The straight-line method of depreciation was used, based on an expected life of 6 years and a residual value of $130,000. Prepare the journal entries to record depreciation for the first 6 months of 2021 and the sale of the computer on July 1, 2021, for $1,000,000.

Answer 1

Ans: calculation of Depreciation Depreciation - Original cost - Salvage Value useful life of Asset = $1,600,000 - $130,000 oyers $1470000 byes $ annum ) $245000x 6 merths Depreciation for Gmenths 12 $123500 (245000) Calculation of Book value as on July 21, 2021 original cest - $ 1,600,000 (-) Depreciation Book value as on 31 Dec 2019 1,355,000 E) Depreciation (245000) Book value as on 31 Dec 2020 1,110,000 (-) Depreciation for 6 months (122500) "Book value as on 1 July 2021 987,500

Book Value profit Sale value $1,000,000 = $12,500. $984,500 Jownal Entry Depreciation Alc Dy. 122.500 To computer Alc ( Being Depreciation provided for 6 months). 122,500 cash Alc Dr 1,000,000 987,500 To computer Alc 12,500 Alc To profit on sale (Being computer sold)

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