Journal entries for depreciation and amortization expense
Prepare journal entries for each of the following transactions or events for Liu Cybersystems:
(a) Acquired computers costing $800 000 and software costing $80 000 on 1 January 2011. Liu expects the computers to have a service life of 10 years and $80 000 residual value. The software is expected to have a service life of four years and zero residual value.
(b) Paid $40 000 to install the computers at Liu’s office. Paid $20 000 to test the software.
(c) Liu records depreciation and amortization expense for the computers and the computer software using the straight-line method for 2011 and 2012.
(d) On 1 January 2013, new software on the market makes the software acquired in 2011 obsolete.
(e) On 2 January 2013, Liu revised the depreciable life of the computers to a total of 14 years and the salvage value to $112 000. Give the entry to record depreciation expense for 2013.
(f) On 31 December 2014, Liu sells the computers for $520 000. Give the required journal entries for 2014.
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