At the end of the prior year ending on December 31, Year 1, O'Connor Company's records reflected the following for Machine Cost when acquired Accumulated depreciation $ 32,400 11,000 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. Give 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 Give the adjusting entry at the end of the current year to record straight-line depreciation for the year. (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 straight-line depreciation for the machinery on December 31st (year 3). Note: Enter debits before credits. Date December 31 General Journal Debit Credit
At the end of the prior year ending on December 31, Year 1, O'Connor Company's records reflected the following for Machine Cost when acquired Accumulated depreciation $ 32,400 11,000 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. Give 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 Give the adjusting entry at the end of the current year to record straight-line depreciation for the year. (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 straight-line depreciation for the machinery on December 31st (year 3). Note: Enter debits before credits. Date December 31 General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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, Year 1, O'Connor Company's records reflected the following for Machine A:
Cost when acquired
Accumulated depreciation
$ 32,400
11,000
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. Give 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
Give the adjusting entry at the end of the current year to record straight-line depreciation for the year. (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 straight-line depreciation for the machinery on December 31st
(year 3).
Note: Enter debits before credits.
Date
December 31
General Journal
Debit
Credit
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