A Company Purchased a Computer System on January 1,2012,for $1,600,000

question 1

Essay

A company purchased a computer system on January 1,2012,for $1,600,000.Prepare the journal entries to record depreciation for the first six months of 2014 and the sale of the computer assuming it is sold on July 1,2014,for $1,000,000 cash.The straight-line method of depreciation was used based on an expected life of six years and a salvage value of $130,000.

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Definitions:

Base Year

A specific year against which economic growth is measured, serving as a standard comparison for financial indices and economic data.

Economic Activity

All actions that involve producing, trading, selling, and buying goods and services within an economy.

Final Good

A product that is consumed directly by the end-user or customer and will not be used to produce any further goods or services.

Laundry Services

Services provided by businesses to clean clothing and textiles for individuals or commercial customers.