Reference no: EM132589245
Easy Company bought a piece of equipment four years ago. At December 31, 2020, the company revalued the equipment to its fair value. The following information relates to the equipment: (Amounts are low for exam purposes.)
Original cost: $1,200;
Residual value: $ 200;
Estimated useful life from purchase date: 10 years;
Years used to December 31, 2020: 4 years;
Fair value at December 31, 2020: $966;
- Depreciation method is straight-line.
Required:
Question 1. Determine the depreciation expense for 2020.
Question 2. Record the journal entry adjustment for the revaluation, using the 'asset adjustment' method.
Question 3. Determine the depreciation expense for 2021.
Question 4. Assume that the fair value at the end of 2022 is $468. Record the journal entry for depreciation first for 2022, and then the entry related to this new fair value for 2022.
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