Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7] Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. 1 $ 1,950,000 40,000 30,000 110,000 $ 2,130,000 No Complete this question by entering your answers in the tabs below. Required 1 Required 2 Ignoring income taxès, prepare any 2024 journal entry(s) related to the change in depreciation methods. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Transaction Answer is complete but not entirely correct. 1 General Journal Depreciation expense Accumulated depreciation x Debit 505,000 Credit 505,000
Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7] Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. 1 $ 1,950,000 40,000 30,000 110,000 $ 2,130,000 No Complete this question by entering your answers in the tabs below. Required 1 Required 2 Ignoring income taxès, prepare any 2024 journal entry(s) related to the change in depreciation methods. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Transaction Answer is complete but not entirely correct. 1 General Journal Depreciation expense Accumulated depreciation x Debit 505,000 Credit 505,000
Chapter1: Financial Statements And Business Decisions
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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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![Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7]
Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure
included the following expenditures:
Purchase price
Freight charges
Installation charges
Annual maintenance charge
Total
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance
method was used to determine depreciation expense for 2022 and 2023.
In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method
for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included
one year of annual maintenance charges for the equipment.
Required:
1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024.
2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods.
$ 1,950,000
40,000
30,000
110,000
$ 2,130,000
Required 1 Required 2
1
Complete this question by entering your answers in the tabs below.
No
Ignoring income taxès, prepare any 2024 journal entry(s) related to the change in depreciation methods.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Answer is complete but not entirely correct.
Transaction
1
General Journal
Depreciation expense
Accumulated depreciation
X
X
Debit
505,000 X
Credit
505,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fae73ae20-88d5-44c7-8614-255efec3fc50%2Ff078fb1c-27cb-4ee6-8f7d-b5bfaf4723d1%2F6tncxm4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7]
Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure
included the following expenditures:
Purchase price
Freight charges
Installation charges
Annual maintenance charge
Total
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance
method was used to determine depreciation expense for 2022 and 2023.
In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method
for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included
one year of annual maintenance charges for the equipment.
Required:
1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024.
2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods.
$ 1,950,000
40,000
30,000
110,000
$ 2,130,000
Required 1 Required 2
1
Complete this question by entering your answers in the tabs below.
No
Ignoring income taxès, prepare any 2024 journal entry(s) related to the change in depreciation methods.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Answer is complete but not entirely correct.
Transaction
1
General Journal
Depreciation expense
Accumulated depreciation
X
X
Debit
505,000 X
Credit
505,000
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