On January 1, Year 1, Naples purchased a computer system that cost $1,480,000. The estimated useful life of the computer is 3 years and salvage value is $40,000. Straight-line depreciation is to be used. On January 1, Year 2, Naples determined that the estimated useful life of the computer would be 4 years instead of 3 years. The estimated salvage value will only be $10,000.Prepare the journal entry to record depreciation expense for Year 1.Prepare the journal entry to record depreciation expense for Year 2.
What will be an ideal response?
| a. | ? | ? | ? |
| Year 1 | ? | ? | ? |
| Dec. 31 | Depreciation Expense-Computer System | 480,000 | ? |
| ? | Accumulated Depreciation-Computer System | ? | 480,000 |
| ? | ($1,480,000 - $40,000)/3 years = $480,000 | ? | ? |
| b. | ? | ? | ? |
| Year 2 | ? | ? | ? |
| Dec. 31 | Depreciation Expense-Computer System | 330,000 | ? |
| ? | Accumulated Depreciation-Computer System | ? | 330,000 |
| ? | ? | ? | ? |
| ? | Book value at 12/31/Yr 1 = $1,480,000 - $480,000 = $1,000,000 | ? | ? |
| ? | Depreciation expense ($1,000,000 - $10,000)/3 years = $330,000 | ? | ? |
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