Question

Nash Company purchased a computer for $8,160 on January 1, 2019. Straight-line depreciation is used, based on a 5-year life and a $1,020 salvage value. On January 1, 2021, the estimates are revised. Nash now feels the computer will be used until December 31, 2022, when it can be sold for $510. Compute the 2021 depreciation. (Round answer to 0 decimal places, e.g. 45,892.) Depreciation expense, 2021 $

Answer 1

$2,397

Step-by-step explanation:

Straight line method charges a fixed amount of depreciation

Depreciation Charge = (Cost - Residual Value) ÷ Estimated useful life

therefore,

Annual depreciation charge

2019

Depreciation Charge = $1,428

2020

Depreciation Charge = $1,428

2021

Depreciation Charge = ($8,160 - $1,428 - $1,428 - $510) ÷ 2

= $2,397

therefore,

Depreciation expense, 2021 is $2,397