At the end of the prior year ending on December 31, O'Connor Company's records reflected the following for Machine A: $ 32,400 11,000 Cost when acquired Accumulated depreciation At the beginning of January of the current year, the machine was renovated at a cost of $16,700. As a result, the estimated life increased from five years to eight years, and the residual value increased from $4,900 to $6,900. The company uses straight-line depreciation. Required: 1. Prepare the journal entry to record the renovation. 2. How old was the machine at the end of the prior year? 3. Prepare the adjusting entry at the end of the current year to record straight-line depreciation for the year.
At the end of the prior year ending on December 31, O'Connor Company's records reflected the following for Machine A: $ 32,400 11,000 Cost when acquired Accumulated depreciation At the beginning of January of the current year, the machine was renovated at a cost of $16,700. As a result, the estimated life increased from five years to eight years, and the residual value increased from $4,900 to $6,900. The company uses straight-line depreciation. Required: 1. Prepare the journal entry to record the renovation. 2. How old was the machine at the end of the prior year? 3. Prepare the adjusting entry at the end of the current year to record straight-line depreciation for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:At the end of the prior year ending on December 31, O'Connor Company's records reflected the following for Machine A:
$ 32,400
11,000
Cost when acquired
Accumulated depreciation
At the beginning of January of the current year, the machine was renovated at a cost of $16,700. As a result, the estimated life
increased from five years to eight years, and the residual value increased from $4,900 to $6,900. The company uses straight-line
depreciation.
Required:
1. Prepare the journal entry to record the renovation.
2. How old was the machine at the end of the prior year?
3. Prepare the adjusting entry at the end of the current year to record straight-line depreciation for the year.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Age of machine
Required 3
How old was the machine at the end of the prior year?
years
Transcribed Image Text:At the end of the prior year ending on December 31, O'Connor Company's records reflected the following for Machine A:
$ 32,400
11,000
Cost when acquired
Accumulated depreciation
At the beginning of January of the current year, the machine was renovated at a cost of $16,700. As a result, the estimated life
increased from five years to eight years, and the residual value increased from $4,900 to $6,900. The company uses straight-line
depreciation.
Required:
1. Prepare the journal entry to record the renovation.
2. How old was the machine at the end of the prior year?
3. Prepare the adjusting entry at the end of the current year to record straight-line depreciation for the year.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Prepare the journal entry to record the renovation.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
1
Record the cost of renovation for the machine.
Nota: Entor dohite hoforo credite
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