Question

On July 1, 2019, Ivanhoe Company purchased new equipment for $90,000. Its estimated useful life was 5 years with a $12,000 salvage value. On December 31, 2022, the company estimated that the equipmentâs remaining useful life was 10 years, with a revised salvage value of $5,000.
Prepare the journal entry to record depreciation on December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

Journal entry

Explanation:

The journal entry to record the depreciation expense is shown below:

Depreciation Expense A/c Dr $7,800

           To Accumulated Depreciation - Equipment A/c $7,800

(Being depreciation expense is recorded)

The computation is shown below:

= ($90,000 - $12,000) ÷ 5 years × 6 months ÷ 12 months

= $7,800

The six months is calculated from July 1, 2019 to December 31, 2019