on january 2, 2018, moser, inc., purchased equipment for $100,000. the equipment was expected to have a $10,000 salvage value at the end of its estimated six-year useful life. straight-line depreciation has been recorded. before adjusting the accounts for 2022, moser decided that the useful life of the equipment should be extended by three years and the salvage value decreased to $8,000.

The accounting technique of spreading out the cost of a tangible item over its useful life is known as depreciation. The equipment amount of depreciation shows how much of an asset's worth has been utilized. By purchasing assets over a predetermined length of time, it enables businesses to generate income from the assets they own.

The initial cost of ownership is substantially equipment lower because businesses don't have to account for them totally in the year that assets are bought. A company's profitability might be significantly impacted if depreciation is not taken into consideration. Long-term assets may also be depreciated by businesses for accounting and tax purposes.

Original Annual dep

Cost of Equipment 100000

Less: Salvage value 10000

Depreciable cost 90000

Divide: Life 6

Annual depreciation 15000

Accumulated dep fr 4 yrs upto 31.12.21 = 15000*4 = 60,000

Book value on 01.01.19 (100000-60000) 40000

Less: Revised salvage value 8000

Depreciable cost 32000

Divide: Revsied remaining life (2+3) 5

Annual depreciation 6400

Journal entry for depreciation

Date Accounts title and explanation Debit $ Credit $

31.12.22 Depreciation expenses 6400

Accumulated depreciation-Equipment 6400

Book value on 01.01.22 (as computed above) 40000

Less: Depreciation fr 2022 6400

Book value as on 31.12.22 33600

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The complete question is

On January 2, 2015, Moser, Inc., purchased equipment for $100,000. The equipment was expected to have a $10,000 salvage value at the end of its estimated six-year useful life. Straight-line depreciation has been recorded. Before adjusting the accounts for 2019, Moser decided that the useful life of the equipment should be extended by three years and the salvage value decreased to $8,000.

a. Prepare a journal entry to record depreciation expense on the equipment for 2019. Round your answer to the nearest dollar.

b. What is the book value of the equipment at the end of 2019 (after recording the depreciation expense for 2019)?

Book Value at year ended December 31, 2019: