Vargas Company purchased a computer for $3,000 on January 1,Year 1.The computer is estimated to have a 5-year useful life and a $500 salvage value.What adjusting entry would Vargas record on December 31,Year 1 to recognize expense related to use of the computer?

Question

Quizplus · Accepted Answer

Depreciation expense is determined as follows:
($3,000 cost - $500 salvage)÷ five-year useful life = $500 per year
The entry to record depreciation expense involves a debit to Depreciation Expense (to increase that expense account)and a credit to Accumulated Depreciation (to increase that contra-asset account)for $500.

Vargas Company Purchased a Computer for $3,000 on January 1,Year