Answer:
In 2021, the adjusting entry to depreciation expense is $29500.
Explanation:
First we will calculate by what factor depreciation is taking place in year 2019 and 2020. (double-declining balance (DDB) depreciation method)
Formula:
(100% / Useful life) * 2
In our case useful life is 10 years
(100% / 10) * 2 = 20% by which depreciation is taking place in year 2019 and 2020.
In 2019 deprecation =$400,000 * 20% = $80,000
Equipment price in 2020= Actual Price in 2019 - deprecation in 2019
Equipment price in 2020 = $400,000 - $80,000
Equipment price in 2020 = $320,000
In 2020 deprecation =$320,000 * 20% = $64000
Equipment price at start of 2021= Equipment price in 2020 - deprecation in 2020
Equipment price at start of 2021= $320,000 - $64000
Equipment price at start of 2021= $256,000
Residual value= $20,000
Deprecation amount= Equipment price at start of 2021 - Residual value
Deprecation amount=$256,000 - $20,000
Deprecation amount=$236,000
Remaining years are 8.
So annual depreciation = $236,000/8
annual depreciation = $29500
In 2021, the adjusting entry to depreciation expense is $29500.
