Ayayai Company is in the process of preparing its financial statements for 2020.Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1 Ayayai purchased equipment on January 2, 2017, for $89,600. At that time, the equipment had an estimated useful life of 10 years with a $4,600 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2.800 salvage value. 2 During 2020, Ayayai changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $330,000. It had a useful life of 10 years and a salvage value of $33,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 Straight-line $29,700 $29,700 Declining-balance 52,800 66,000 Ayayai purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $16,000 and a useful life of 8 years. Ayayai's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. 3.
Ayayai Company is in the process of preparing its financial statements for 2020.Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1 Ayayai purchased equipment on January 2, 2017, for $89,600. At that time, the equipment had an estimated useful life of 10 years with a $4,600 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $2.800 salvage value. 2 During 2020, Ayayai changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $330,000. It had a useful life of 10 years and a salvage value of $33,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 Straight-line $29,700 $29,700 Declining-balance 52,800 66,000 Ayayai purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $16,000 and a useful life of 8 years. Ayayai's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the
information provided. (Ignore taxes.) (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 O for the amounts)
No. Account Titles and Explanation
Debit
Credit
1.
2.
3.
(To record current year depreciation.)
(To correct prior year depreciation.)
Transcribed Image Text:Ayayai Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been
recorded in 2020. The following information related to depreciation of fixed assets is provided to you.
1. Ayayai purchased equipment on January 2, 2017, for $89,600. At that time, the equipment had an estimated useful life of
10 years with a $4,600 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result
of additional information, the company determined that the equipment has a remaining useful life of 4 years witha $2,800
salvage value.
2.
During 2020, Ayayai changed from the double-declining-balance method for its building to the straight-line method. The
building originally cost $330,000. It had a useful life of 10 years and a salvage value of $33,000. The following
computations present depreciation on both bases for 2018 and 2019.
2019
2018
Straight-line
$29,700
$29,700
Declining-balance
52,800
66,000
Ayayai purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $16,000 and a
useful life of 8 years. Ayayai's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the
salvage value.
3.
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