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Global Flow Inc. purchased a computer on January 1, 2016 for $3,000 cash. It had an estimated useful life of three years and no residual value. Global Flow made the following changes to the computer:
|
Mar. 1, 2016 |
Added storage capacity at a cost of $1,000. This had no effect on residual value or estimated useful life. |
|
Apr. 1, 2017 |
Added a new processing board for $2,000, which extended the estimated useful life of the computer another three years but did not affect residual value. |
Required:
- Prepare a journal entry to record each of the above expenditures. Assume all amounts are material. Descriptions are not necessary.
- Calculate and prepare journal entries to record depreciation expense for 2016 and 2017 using the double-declining balance method. Assume a December 31 fiscal year-end and that the company uses the ½ year rule to calculate depreciation expense in the year of acquisition and disposal.
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