Business Finance Homework Help

CP 8‐6
Global Flow Inc. purchased a computer on January 1, 2019 for $3,000
cash. It had an estimated useful life of three years and no salvage
value. Global Flow made the following changes to the computer:

Mar. 1, 2019 Added storage capacity at a cost of $1,000. This had no
effect on salvage value or estimated useful life.

Apr. 1, 2020 Added a new processing board for $2,000, which
extended the estimated useful life of the computer
another three years but did not affect salvage value.

Required:

1. Prepare a journal entry to record each of the above expenditures.
Assume all amounts are material. Descriptions are not necessary.

2. Calculate and prepare journal entries to record depreciation
expense for 2019 and 2020 using the double‐declining balance
method. Assume a December 31 fiscal year‐end and that the
company uses the ½ year rule to calculate depreciation expense in
the year of acquisition and disposal.