Question
Yellow Inc. is recording a $10,000 annual straight line depreciation expense on equipment purchased 3 years ago [January 1, 2016]. The equipment originally costed $200,000.
Yellow Inc. is recording a $10,000 annual straight line depreciation expense on equipment purchased 3 years ago [January 1, 2016]. The equipment originally costed $200,000. The current [January 1, 2019] book value of the equipment is $170,000. The equipment was estimated to have zero salvage value at the time of purchase. On January 1, 2019 Yellow Inc. decided to reduce the original useful life of the equipment by 25 % and to establish a salvage value of $20,000.
Tax effects are ignored for this problem.
Required:
Prepare the journal entry to record the annual depreciation on December 31, 2019.
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