PRE ovv ? Question 3: 10 Points Nanki Corporation purchased equipment on January

Question

PRE ovv ? Question 3: 10 Points Nanki Corporation purchased equipment on January 1.2016, for $640.000. In 2016 and 2017 Nanki depreciated the asset on a straight-line basis with an estimated useful life of ten years and a $10,000 residual value. In 2018, due to changes in technology, Nanki revised the useful life to a total of eight years with no residual value. What depreciation would Nanki record for the year 2018 on this equipment -show the journal entry to record the depreciation? Dr. Cr. Account leulations: 4: 10 Points poration reported the following information at year-end: Book Value S 500,000 S 45,000 s 40,000 S 130.000 Estimated Cash Flows S 380,000 s 40,000 s 38,000 S 120,000 Fair Value S 360,000 S 38,000 S 39,000 S 85,000 bove information: otal amount of impairment loss that

Explanation / Answer

3) Depreciation charged in 2016 and 2017 = (Cost - Residual Value)/Useful life

= ($640,000 - $10,000)/10 yrs = $630,000/10 = $63,000 per year

Total depreciation charged upto Dec 31, 2017 = $63,000+$63,000 = $126,000

Book value at the beginning of 2018 = Cost - Total depreciation charged

= $640,000 - $126,000 = $514,000

Revised estimated useful life = 8 yrs

Remaining life after 2017 = 8 - 2 = 6 yrs

Revised Depreciation charged from 2018 = Book Value at the beg of 2018/Remaining life

= $514,000/6 yrs = $85,667 per year

Journal Entry (Amounts in $)

  

Account Debit Credit Depreciation expense 85,667 Accumulated depreciation-Equipment 85,667 (To record the depreciation expense in 2018)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.