Indigo Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have beenrecorded in 2020. The following information related to depreciation of fixed assets is provided to you.1.2.3.20192018Straight-line$29.700 $29,700Declining-balance 52.800 66,000(a)Indigo purchased equipment on January 2, 2017, for $89,600. At that time, the equipment had an estimated useful life of 10years with a $4,600 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result ofadditional information, the company determined that the equipment has a remaining useful life of 4 years with a $2,800salvage value1.During 2020, Indigo changed from the double-declining-balance method for its building to the straight-line method. Thebuilding originally cost $330,000. It had a useful life of 10 years and a salvage value of $33,000. The following computationspresent depreciation on both bases for 2018 and 2019.✓ Your answer is correct.Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to theinformation 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)2.No. Account Titles and Explanation3.(b)Indigo purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $16,000 and a usefullife of 8 years. Indigo's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvagevalue.Depreciation ExpenseAccumulated Depreciation EquipmentDepreciation ExpenseAccumulated Depreciation BuildingsDepreciation ExpenseAccumulated Depreciation Machinery(To record current year depreciation.)Accumulated Depreciation MachineryRetained Earnings(To correct prior year depreciation.)eTextbook and MediaList of AccountsIncome before depreciation expenseDepreciation expenseINDIGO COMPANYComparative Income StatementsFor the Years 2020 and 20192020Net income$Debit$$15325Show comparative net income for 2019 and 2020. Income before depreciation expense was $290,000 in 2020, and was$300,000 in 2019. (Ignore taxes)$22275130003000Credit20191532522275130003000

The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…

Indigo 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. Indigo 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, Indigo 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. Straight-line 2019 2018 $29.700 $29,700

Indigo 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. Indigo 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, Indigo 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. Straight-line 2019 2018 $29.700 $29,700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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