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Wardell Company purchased a mini computer on January 1, 2011, at a cost of $40,000. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an estimated residual value of $4,000. On January 1, 2013, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $900.
Required:
1. Prepare the appropriate adjusting entry for depreciation in 2013 to reflect the revised estimate.
2. Repeat requirement 1 assuming that the company uses the sum-of-the-years’-digits method instead of the straight-line method.
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