Answer:
Debit : Depreciation Expense $4,510
Credit : Accumulated Depreciation $4,510
Explanation:
Straight line method charges a fixed amount of depreciation for the period the asset is used in the business.
<em>Depreciation expense = (Cost - Residual Value) ÷ Estimated Useful life</em>
therefore
Annual Depreciation Expense = ($66,000 - $4,400) ÷ 8
= $7,700
2016
Annual Depreciation Expense = $7,700
2017
Annual Depreciation Expense = $7,700
2018
Annual Depreciation Expense = $7,700
2019
Annual Depreciation Expense = $7,700
2020
Annual Depreciation Expense = $7,700
2021
Beginning Accumulated depreciation Balance = $38,500
<u>Calculate New Depreciable amount</u>
Depreciable amount = Cost - Accumulated depreciation - New Salvage Value
= $66,000 - $38,500 - $4,950
= $22,550
<u>Calculate New Useful Life</u>
5 years have already expired so the remainder out of the new 10 years is 5 years
<u>Calculate New Depreciation Expense</u>
Depreciation Expense = $22,550 ÷ 5 = $4,510
