Try another version of this question Assume that All You Can Eat Catering paid $24,000 for equipment with a 10 year life and zero expected residual value.
1. Record depreciation expense on the equipment for year 5 by the straight-line method.
Straight-line Method = (Cost - Residual Value)/(Time) = Depreciation per year Straight-line Method = -/ = per year Depreciation x Years = Amount after 4 years x = - =
Straight-line Method = (Cost - Residual Value)/(Time) = Depreciation per year Straight-line Method = -/ = per year
After using the equipment for 4 years, the company determines that the asset will remain useful for only 3 more years.
Straight-line
Accumulated depreciation after 4 years
Book value after 4 years
Book Value - Accum. Depr. = Book Value
Revised depreciation
Date Description Debit Credit
2. What is accumulated depreciation at the end of year 5?
Straight-line Depreciation Expense - years 1- 4 Depreciation Expense - year 5 Total Accumulated Depreciation Date Description Debit Credit Depreciation Expense 4,800 Accumulated Depr-Equipment 4,800 Straight-line Depreciation Expense - years 1- 4 9,600 Depreciation Expense - year 5 4,800 Total Accumulated Depreciation 14,400