On 1 January 2021, a company bought a machine that cost $400,050. The machine has an estimated 10 years useful life and residual value of $3,900. The machine was in a warehouse in Mexico and was transported to California at an additional cost of $5000. In order to get the equipment operational, the company also paid installation costs of $800.

On 31 December 2023, the useful life of the equipment was adjusted to 7 years from the date of purchase, and its residual value is also revised to $1,700.

Required:

Provide the journal entries relating to this equipment for 2021, 2022 and 2023.

Solution:

Date	Particulars	Dr ($)	Cr ($)
01/01/21
	Acquisition of equipment
31/12/21
	Annual depreciation =
31/12/22
	Annual depreciation
31/12/23
	Annual depreciation =

using straight line method