Question

Metlock Company purchased a computer for $8,800 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,100 salvage value. On January 1, 2021, the estimates are revised. Metlock now feels the computer will be used until December 31, 2022, when it can be sold for $550.

Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.) Depreciation expense, 2021

Answer 1

$2,585

Step-by-step explanation:

carrying value on December 31, 2020 = $8,800 - [($8,800 - $1,100) x 2/5] = $5,720

new depreciable value = $5,720 - $550 = $5,170

depreciation expense per year = $5,170 / 2 = $2,585

if an asset's useful life changes, the change will only influence future depreciation rates, not past ones.