Machinery purchased for $49,400 by Indigo Corp. on January 1, 2015, was originally estimated to have an 8-year useful life with a residual value of $3,000. Depreciation has been entered for five years on this basis. In 2020, it is determined that the total estimated useful life (including 2020) should have been 10 years, with a residual value of $4,000 at the end of that time. Assume straight-line depreciation and that Indigo Corp. uses IFRS for financial statement purposes. 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 0 for the amounts.) Account Titles and Explanation Debit Credit Prepare the entry to record depreciation for 2020. (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 0 for the amounts.) Account Titles and Explanation Debit Credit Repeat part (b) assuming Indigo Corp. uses ASPE and the machinery is originally estimated to have a physical life of 8.5 years and a salvage value of $0. In 2020, it is determined that the total estimated physical life (including 2020) should have been 11 years, with a salvage value of $100 at the end of that time. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit
Machinery purchased for $49,400 by Indigo Corp. on January 1, 2015, was originally estimated to have an 8-year useful life with a residual value of $3,000. Depreciation has been entered for five years on this basis. In 2020, it is determined that the total estimated useful life (including 2020) should have been 10 years, with a residual value of $4,000 at the end of that time. Assume straight-line depreciation and that Indigo Corp. uses IFRS for financial statement purposes. 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 0 for the amounts.) Account Titles and Explanation Debit Credit Prepare the entry to record depreciation for 2020. (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 0 for the amounts.) Account Titles and Explanation Debit Credit Repeat part (b) assuming Indigo Corp. uses ASPE and the machinery is originally estimated to have a physical life of 8.5 years and a salvage value of $0. In 2020, it is determined that the total estimated physical life (including 2020) should have been 11 years, with a salvage value of $100 at the end of that time. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:b)
Machinery purchased for $49,400 by Indigo Corp. on January 1, 2015, was originally estimated to have an 8-year useful life with a residual value of $3,000. Depreciation has been entered for five years
on this basis. In 2020, it is determined that the total estimated useful life (including 2020) should have been 10 years, with a residual value of $4,000 at the end of that time. Assume straight-line
depreciation and that Indigo Corp. uses IFRS for financial statement purposes.
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 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Prepare the entry to record depreciation for 2020. (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 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Repeat part (b) assuming Indigo Corp. uses ASPE and the machinery is originally estimated to have a physical life of 8.5 years and a salvage value of $0. In 2020, it is determined that the total
estimated physical life (including 2020) should have been 11 years, with a salvage value of $100 at the end of that time. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation
Debit
Credit
Repeat part (b) assuming Indigo Corp. uses the double-declining-balance method of depreciation. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation
Debit
Credit
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