On January 1, 2018, Kefauver Company purchased a piece of equipment for $375,000. The equipment had a useful life of 10 years and a residual value of $10,000. The company initially starts recording depreciation on a straight-line method. The following independent situations occur at the beginning of 2020: а. The life of the equipment was originally estimated to be 10 years but due to the wear and tear on the machine they changed it to a remaining life of 7 years. b. It was discovered that when initially recorded on the books the residual value had been ignored. Required: Prepare all journal entries related to the equipment for 2020 for each of the independent situations, ignoring income taxes.

On January 1, 2018, Kefauver Company purchased a piece of equipment for $375,000. The equipment had a useful life of 10 years and a residual value of $10,000. The company initially starts recording depreciation on a straight-line method. The following independent situations occur at the beginning of 2020: а. The life of the equipment was originally estimated to be 10 years but due to the wear and tear on the machine they changed it to a remaining life of 7 years. b. It was discovered that when initially recorded on the books the residual value had been ignored. Required: Prepare all journal entries related to the equipment for 2020 for each of the independent situations, ignoring income taxes.

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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