On October 1, 2014, Winter Corp. buys a computer system for $270,000 in cash. Assume that the computer is expected to have a five-year life and an estimated salvage value of $30,000 at the end of that time.
REQUIRED:
1. Show how the effect of the purchase of the computer on October 1, 2014 can be identified and analyzed.
2. Compute the depreciable cost of the computer.
3. Using the straight-line method, compute the monthly depreciation.
4. Identify and analyze the adjustment for depreciation at the end of October 2014.
5. Compute the computer's carrying value that will be shown on Winter's balance sheet prepared on December 31,
2014.

Question

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The Answer of On October 1, 2014, Winter Corp. buys a computer system for $270,000 in cash. Assume that the computer is expected to have a five-year life and an estimated salvage value of $30,000 at the end of that time.
REQUIRED:
1. Show how the effect of the purchase of the computer on October 1, 2014 can be identified and analyzed.
2. Compute the depreciable cost of the computer.
3. Using the straight-line method, compute the monthly depreciation.
4. Identify and analyze the adjustment for depreciation at the end of October 2014.
5. Compute the computer's carrying value that will be shown on Winter's balance sheet prepared on December 31,
2014.