Problem:
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:
Question 1: Prepare the appropriate adjusting entry for depreciation in 2013 to reflect the revised estimate.
Question 2: Assuming that the company uses the sum-of-the-years'-digits method instead of the straight-line method.
Note: Provide support for your rationale.