Headland Cole Inc. acquired the following assets in January of 2023 Equipment, estimated useful life, 5 years; salvage value, $14,600 Building, estimated useful life, 30 years; no salvage value $566,600 $645,000 The equipment has been depreciated using the sum-of-the-years-digits method for the first 3 years for financial reporting purposes. In 2026, 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 useful life or salvage value. It was also decided to change the total estimated useful 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) Your answer is partially correct. Prepare the general journal entry to record depreciation expense for the equipment in 2026. (Round answers to O decimal places, eg. 125. Credit account titles are automatically indented when the 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. List debit entry before credit entry.) Account Titles and Explanation Depreciation Expense Accumulated Depreciation-Equipment eTextbook and Media List of Accounts Debit 73600 Credit 73600
Headland Cole Inc. acquired the following assets in January of 2023 Equipment, estimated useful life, 5 years; salvage value, $14,600 Building, estimated useful life, 30 years; no salvage value $566,600 $645,000 The equipment has been depreciated using the sum-of-the-years-digits method for the first 3 years for financial reporting purposes. In 2026, 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 useful life or salvage value. It was also decided to change the total estimated useful 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) Your answer is partially correct. Prepare the general journal entry to record depreciation expense for the equipment in 2026. (Round answers to O decimal places, eg. 125. Credit account titles are automatically indented when the 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. List debit entry before credit entry.) Account Titles and Explanation Depreciation Expense Accumulated Depreciation-Equipment eTextbook and Media List of Accounts Debit 73600 Credit 73600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Headland Cole Inc. acquired the following assets in January of 2023
Equipment, estimated useful life, 5 years; salvage value, $14,600
Building, estimated useful life, 30 years; no salvage value
$566,600
$645,000
The equipment has been depreciated using the sum-of-the-years-digits method for the first 3 years for financial reporting purposes.
In 2026, 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 useful life or salvage value. It was also decided to change the total estimated useful 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)
Your answer is partially correct.
Prepare the general journal entry to record depreciation expense for the equipment in 2026. (Round answers to O decimal places,
eg. 125. Credit account titles are automatically indented when the 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. List debit entry before credit entry.)
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation-Equipment
eTextbook and Media
List of Accounts
Debit
73600
Credit
73600
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