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Question - On January 3, 2012, Airflow Corporation, a company selling stunt kites, purchased a large number of personal computers. The cost of these computers was $170,000. On the date of purchase, Sandy's management estimated that the computers would last approximately four years and would have a salvage value at that time of $20,000. The company used the double-declining-balance method to depreciate the computers.
During January 2013, Airflow's management realized that technological advancements had made the computers virtually obsolete. The new salvage value is estimated to be $1000. Management proposed changing the estimated useful life of the computers to two years.
Prepare the journal entry necessary at the end of 2013 to record depreciation on the computers.
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