E10.11 (LO 1) (Depreciation Change in Estimate) Machinery purchased for $60,000 by Tom Brady Co. in 2021 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2026, it is determined that the total estimated life should be 10 years with a salvage value of $4,500 at the end of that time. Assume straight-line depreciation. Instructions a. Prepare the entry to correct the prior years' depreciation, if necessary. b. Prepare the entry to record depreciation for 2026.

E10.11 (LO 1) (Depreciation Change in Estimate) Machinery purchased for $60,000 by Tom Brady Co. in 2021 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2026, it is determined that the total estimated life should be 10 years with a salvage value of $4,500 at the end of that time. Assume straight-line depreciation. Instructions a. Prepare the entry to correct the prior years' depreciation, if necessary. b. Prepare the entry to record depreciation for 2026.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Do not give answer in image
E10.1 (LO 1) Excel (Depreciation Computations-SL, SYD, DDB)Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $469,000. The asset is expected to have a service life of 12 years and a salvage value of $40,000. Instructions a. Compute the amount of depreciation for each of Years 1 through 3 using the straight-line depreciation method. b. Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. c. Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. (In performing your calculations, round constant percentage to the nearest one-hundredth of a point and round answers to the nearest dollar.)
PQ16.09 An asset with a first cost of $100,000 is depreciated over 5-year period. It is expected to have a $10,000 salvage value at the end of 5 years. Using the straight-line method, what is the book value at the end of year 2?
(a) Situation 1: Cheyenne Corporation purchased electrical equipment at a cost of $11,500 on June 2, 2020. From 2020 through 2023, the equipment was depreciated on a straight-line basis, under the assumption that it would have a 10-year useful life and a $1,900 residual value. After more experience and before recording 2024's depreciation, Cheyenne revised its estimate of the machine's useful life downward from a total of 10 years to 8 years, and revised the estimated residual value to $1,900. On April 29, 2025, after recording part of a year's depreciation for 2025, the company traded in the equipment for a newer model, and received a $3,700 trade-in allowance, even though the equipment's fair value was only $2,600. The new asset had a list price of $14,200 and the supplier accepted $10,500 cash for the balance. The new equipment was depreciated on a straight-line basis, assuming a seven-year useful life and a $1,130 residual value. Determine the amount of depreciation expense…