On January 3, 2014, Airflow Corporation, a company selling stunt kites, purchased a large number of personal

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On January 3, 2014, Airflow Corporation, a company selling stunt kites, purchased a large number of personal computers. The cost of these computers was $85,000. On the date of purchase, Airflow's management estimated that the computers would last approximately four years and would have a salvage value at that time of $10,000. The company used the double-declining-balance method to depreciate the computers. During January 2015, Airflow's management realized that technological advancements had made the computers virtually obsolete. The new salvage value is estimated to be $1,000. Management proposed changing the estimated useful life of the computers to two years.

Instructions:

Prepare the journal entry necessary at the end of 2015 to record depreciation on the computers.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Intermediate Accounting

ISBN: 978-1133957911

19th edition

Authors: Earl K. Stice, James D. Stice

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