Answer:
The journal entry to record the depreciation on December 31, 2019 is:
Debit Depreciation expense $4,000
Credit Accumulated depreciation $4,000
<em>(To record accumulated depreciation on December 31, 2019)</em>
Explanation:
Using a straight-line method (method of allocating the cost of an asset over its useful life after considering the salvage value due to wear and tear), the depreciation is calculated as: (Cost - Residual Value) / Useful life
Depreciation = ($80,000 - $16,000) / 8 years
Depreciation = $8,000 yearly
Since we are just looking for the depreciation on December 31, 2019 (July 1, 2019 - December 31, 2019), it will be $8,000 x 0.5 = $4,000.
From (July 1, 2019 - December 31, 2021), 2.5 years, the accumulated depreciation will be $8,000 x 2.5 years = $20,000, while the net book value of the equipment is $80,000 - $20,000 = $60,000.
New depreciation from 2022 onward is ($60,000 - $5,000) / 7.5 years = $7,333 yearly.
