On January 2, 2015, Moser, Inc., purchased equipment for $100,000. The equipment was expected to have a $10,000 salvage value at
the end of its estimated six-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2019, Moser decided that the useful life of the equipment should be extended by three years and the salvage value decreased to $8,000. a. Prepare a journal entry to record depreciation expense on the equipment for 2019. Round your answer to the nearest dollar.
b. What is the book value of the equipment at the end of 2019 (after recording the depreciation expense for 2019)?
To record the depreciation expense for 2019, the journal entry includes: Debit Depreciation expense for $6,400 and Credit Accumulated depreciation for $6,400. The calculated accumulated expense for the period is established at $33,600. Depreciation represents the systematic allocation of an asset's cost, derived by the formula: Depreciation = (Cost - salvage value)/estimated life. The determined depreciation of $15,000 accumulated over a four-year duration equates to $60,000, leaving us with a net book value of $40,000. With an extended life of 5 years for the asset, the revised depreciation equates to new depreciation expenses of $6,400 to finalize the book value at the end of 2019 at $33,600.
The role of financial managers involves maintaining the financial stability of an organization. They are responsible for creating financial statements, overseeing investment strategies, and formulating plans alongside data evaluations aimed at achieving the organization’s long-term financial objectives. Keisha Hunter manages everyday financial data to ensure her employer has sufficient funds for operations and assesses the necessity and timing for opening a second distribution location.
