ent has been depreciated using the sum-of-the-years"e company decided to change the method of computing as made in the estimated service life or salvage value. from 30 years to 40 years, with no change in the estim pare the general journal entry to record depreciatione
ent has been depreciated using the sum-of-the-years"e company decided to change the method of computing as made in the estimated service life or salvage value. from 30 years to 40 years, with no change in the estim pare the general journal entry to record depreciatione
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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.
Topic Video
Question
100%
![Riverbed Cole Inc. acquired the following assets in January of 2018.
Equipment, estimated service life, 5 years; salvage value, $14,300
$528,800
Building, estimated service life, 30 years; no salvage value
$759,000
The equipment has been depreciated using the sum-of-the-years"-digits method for the first 3 years for financial reporting purposes.
In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but
no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of
the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-
line method.
(a)
Prepare the general journal entry to record depreciation expense for the equipment in 2021.
(b)
Prepare the journal entry to record depreciation expense for the building in 2021.
(Round answers to 0 decimal places, eg. 125. 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
(a)
(b)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffb9455e9-1b75-42ab-87bf-b8a6d9f2482d%2F4fc39a11-0844-4c88-9dba-58db15477ce6%2F5j7mi7j_processed.png&w=3840&q=75)
Transcribed Image Text:Riverbed Cole Inc. acquired the following assets in January of 2018.
Equipment, estimated service life, 5 years; salvage value, $14,300
$528,800
Building, estimated service life, 30 years; no salvage value
$759,000
The equipment has been depreciated using the sum-of-the-years"-digits method for the first 3 years for financial reporting purposes.
In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but
no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of
the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-
line method.
(a)
Prepare the general journal entry to record depreciation expense for the equipment in 2021.
(b)
Prepare the journal entry to record depreciation expense for the building in 2021.
(Round answers to 0 decimal places, eg. 125. 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
(a)
(b)
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education