Question

Coronado Co. purchased equipment for $519,400 which was estimated to have a useful life of 10...

Coronado Co. purchased equipment for $519,400 which was estimated to have a useful life of 10 years with a salvage value of $11,400 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2018, it is determined that the total estimated life should be 15 years with a salvage value of $4,200 at the end of that time. (a) Prepare the entry (if any) to correct the prior years’ depreciation. (b) Prepare the entry to record depreciation for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Depreciation under Straight-line method = (Cost - Salvage value) / Estimated useful life

= ($519,400 - $11,400) / 10

= $50,800

Accumulated depreciation for 7 years = $50,800 * 7 = $355,600

Book value after 7 years = Cost - Accumulated depreciation

= $519,400 - $355,600

= $163,800

Revised remaining useful life = 15 - 7 = 8 years

Revised salvage value = $4,200

Depreciation = (Book value - Revised salvage value) / Revised remaining useful life

= ($163,800 - $4,200) / 8

= $19,950

(a)

No Journal entry

(b)

Depreciation expense $19,950
Accumulated depreciation $19,950
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Machinery purchased for $68,400 by Metlock Co. in 2013 was originally estimated to have a life...
Machinery purchased for $68,400 by Metlock Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,560 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2018, it is determined that the total estimated life should be 10 years with a salvage value of $5,130 at the end of that time. Assume straight-line depreciation. Prepare the entry to correct the prior year's depreciation, if...
Machinery purchased for $67,800 by Funland Co. in 2016 was originally estimated to have a life...
Machinery purchased for $67,800 by Funland Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,520 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $5,085 at the end of that time. Assume straight-line depreciation. Prepare the entry to correct the prior years' depreciation, if...
Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January...
Splish Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2016 for $12,500,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2017, new technology was introduced that would accelerate the obsolescence of Splish’s equipment. Splish’s controller estimates that expected future net cash flows on the equipment will be $7,875,000 and that the fair value of the equipment is $7,000,000. Splish intends to continue using the equipment,...
Sheffield Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5...
Sheffield Cole Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $ 14,800 $ 515,800 Building, estimated service life, 30 years; no salvage value $ 642,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful...
On January 1, 2016, Maria Company purchased a building and machinery that have the following useful lives, salvage value, and costs. Building, 25-year estimated useful life, $9,480,000 cost, $948,000 salvage value Machinery, 10-year estimated useful life, $1,700,000 cost, no salvage value The building has been depreciated under the straight-line method through 2020. In 2021, the company decided to switch to the double-declining balance method of depreciation for the building. Maria also decided to change the total useful life of the...
Exercise 22-13 Riverbed Co. purchased equipment for $573,000 which was estimated to have a useful life...
Exercise 22-13 Riverbed Co. purchased equipment for $573,000 which was estimated to have a useful life of 10 years with a salvage value of $10,200 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2018, it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. (a) Prepare the entry (if any) to correct the prior years’ depreciation....
Novak Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5...
Novak Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,400 $547,900 Building, estimated service life, 30 years; no salvage value $708,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage...
Ivanhoe Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5...
Ivanhoe Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $14,800 $560,800 Building, estimated service life, 30 years; no salvage value $690,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost $10,350,000 Accumulated depreciation to date 1,150,000 Expected future net cash flows 8,050,000 Fair value 5,520,000 Assume that Whispering will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required,...
At the end of 2020, Riverbed Corporation owns a licence with a remaining life of 10...
At the end of 2020, Riverbed Corporation owns a licence with a remaining life of 10 years and a carrying amount of $536,000. Riverbed expects undiscounted future cash flows from this licence to total $541,800. The licence’s fair value is $431,700 and disposal costs are estimated to be nil. The licence’s discounted cash flows (that is, value in use) are estimated to be $483,500. Riverbed prepares financial statements in accordance with IFRS. Determine if the licence is impaired at the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT