Reference no: EM132961860

Bears Corporation purchased equipment costing $135,000 on January 1, 2018. At that time the useful life of the equipment was estimated to be 12 years and the residual value was estimated to be $7,500. Depreciation up to December 31, 2019, has been recorded using the straight-line method and the company operates on a calendar year basis. On January 1, 2020, the estimated useful life was revised to a total of 10 years and the residual value was revised to $8,000.

Showing all your calculations:

Problem 1: Calculate the annual depreciation for the newly acquired equipment for the years 2018 and 2019,

Problem 2: Calculate the net book value of the equipment on December 31, 2019,

Problem 3: Calculate the new depreciable amount of the equipment given the updated information on January 1, 2020,

Problem 4: Calculate the revised annual depreciation amount for the year 2020, and

Problem 5: Prepare the journal entry to record the depreciation expense for 2020.