6. During 2020, Mannix Company determined that machinery being depreciated by the straight-line method over a 10-year life had a total estimated life of only 7 years. The machinery was acquired on 1/1/18 at a cost of $400,000; it was expected to have a residual of $50,000 (which is unchanged). If the 7-year life had been used, accumulated depreciation would have been $100,000 at 12/31/19 instead of $70,000. Ignoring income taxes, what should be reported in Mannix's income statement for the year ended 12/31/20 as the depreciation expense for 2020 and what adjustment will be made to the beginning balance of retained earnings as reported for 1/1/20? a. $21,000 and $0. b. $56,000 and $0. c. $35,000 and $30,000. d. $56,000 and $30,000.

6. During 2020, Mannix Company determined that machinery being depreciated by the straight-line method over a 10-year life had a total estimated life of only 7 years. The machinery was acquired on 1/1/18 at a cost of $400,000; it was expected to have a residual of $50,000 (which is unchanged). If the 7-year life had been used, accumulated depreciation would have been $100,000 at 12/31/19 instead of $70,000. Ignoring income taxes, what should be reported in Mannix's income statement for the year ended 12/31/20 as the depreciation expense for 2020 and what adjustment will be made to the beginning balance of retained earnings as reported for 1/1/20? a. $21,000 and $0. b. $56,000 and $0. c. $35,000 and $30,000. d. $56,000 and $30,000.

Name: 6. During 2020, Mannix Company determined that machinery being deprec
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Description: 6. During 2020, Mannix Company determined that machinery being depreciated by the straight-linemethod over a 10-year life had a total estimated life of only 7 years. The machinery was acquired on1/1/18 at a cost of $400,000; it was expected to have

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

6. During 2020, Mannix Company determined that machinery being depreciated by the straight-line
method over a 10-year life had a total estimated life of only 7 years. The machinery was acquired on
1/1/18 at a cost of $400,000; it was expected to have a residual of $50,000 (which is unchanged). If
the 7-year life had been used, accumulated depreciation would have been $100,000 at 12/31/19
instead of $70,000. Ignoring income taxes, what should be reported in Mannix's income statement for
the year ended 12/31/20 as the depreciation expense for 2020 and what adjustment will be made to
the beginning balance of retained earnings as reported for 1/1/20?
a. $21,000 and $0.
b. $56,000 and $0.
c. $35,000 and $30,000.
d. $56,000 and $30,000.

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