At the beginning of 2016, Copland Drugstore purchased a new computer system for $52,000. It is expected

Question:

At the beginning of 2016, Copland Drugstore purchased a new computer system for $52,000. It is expected to have a five-year life and a $7,000 salvage value.

Required

a. Compute the depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation.

(2) Double-declining-balance depreciation.

b. Record the purchase of the computer system and the depreciation expense for the first year under straight-line and double-declining-balance methods in a financial statements model like the following one:

At the beginning of 2016, Copland Drugstore purchased a new

c. Prepare the journal entries to recognize depreciation for each of the five years, assuming that the company uses
(1) Straight-line depreciation.
(2) Double-declining-balance depreciation.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...