Answer to Question #187708 in Accounting for konswani

Question

Equipment was acquired on January 1, 2017, at a cost of K75,000. The equipment was

originally estimated to have a salvage value of K5,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2020, using the Double Declining Balance Method. On January 1, 2021, the estimated salvage value was revised to K7,000 and the useful life was revised to a total of 8 years.

Required:

Calculate the book value at the time of the revision (January 1, 2021).

Pass the journal entry for the depreciation in 2021.

Answer 1

find the residual value

residual value 01.01.2021: 30720

Depreciation for 2021 after revision: 7680

Debit main production Credit Depreciation - 7680