Answer:
2016 Depreciation
Dr depreciation expense $5720
Cr Accumulated depreciation $5720
2017 Depreciation
Dr depreciation expense $5720
Cr Accumulated depreciation $5720
Journal entries for 2018 expenditure
Dr repairs and maintenance $2900
Dr Equipment account $11850
Cr Cash account $14750
2018 Depreciation
Dr depreciation expense $4800.83
Cr Accumulated depreciation $4800.83
Explanation:
There are two policies for depreciating non-current asset especially when it is acquired part-way through the year like we have here, namely full year depreciation in the year of purchase and none in the year of disposal or proportional depreciation throughout the useful life,I am adopting the former in this question.
Formula for depreciation=cost-residual value/useful life
Yearly depreciation is ($57200-$0)/10=$5720
However,after two years the book value is calculated thus:
Book value=$57200-($5720*2)=$45760
additional cost incurred in enhancing the capacity of the asset would be added : $45760
+$11,850=$57610
Since the useful life has also been reviewed up to 12 years, the depreciation from now on is $57610/12=$4800.83
