Machinery purchased for $40,800 by Blue Spruce Corp. on January 1, 2018, was original a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2023, it is determined that the total estimated useful life (including 2023) should have been 10 years, with a residual value of $4,800 at the end of that time. Assume straight-line depreciation and that Blue Spruce uses IFRS for financial statement purposes. (a) Prepare the entry that is required to correct the prior years' depreciation, if any. (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 Debit Credit Media
Machinery purchased for $40,800 by Blue Spruce Corp. on January 1, 2018, was original a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2023, it is determined that the total estimated useful life (including 2023) should have been 10 years, with a residual value of $4,800 at the end of that time. Assume straight-line depreciation and that Blue Spruce uses IFRS for financial statement purposes. (a) Prepare the entry that is required to correct the prior years' depreciation, if any. (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 Debit Credit Media
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Machinery purchased for $40,800 by Blue Spruce Corp. on January 1, 2018, was originally estimated to have an 8-year useful life with
a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2023, it is determined that the total estimated
useful life (including 2023) should have been 10 years, with a residual value of $4,800 at the end of that time. Assume straight-line
depreciation and that Blue Spruce uses IFRS for financial statement purposes.
(a)
Prepare the entry that is required to correct the prior years' depreciation, if any. (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
and Media
Debit
Credit
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