Sage purchased equipment on January 2, 2017, for $78,900. At that time, the equipment had an estimated useful life of 10 years with a $4,900 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. During 2020, Sage changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 $27,000 60,000 $27,000 aight-line dining-balance 48,000 Sage purchased a machine on July 1, 2018, at a cost of $140,000. The machine has a salvage value of $14,000 and a useful life of 8 years. Sage's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. are the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are (r entered Oo not (ndent manually, If no entry Is reguired, select "No Entry" for the account titles and enter 0 for the amounts.)
Sage purchased equipment on January 2, 2017, for $78,900. At that time, the equipment had an estimated useful life of 10 years with a $4,900 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. During 2020, Sage changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 $27,000 60,000 $27,000 aight-line dining-balance 48,000 Sage purchased a machine on July 1, 2018, at a cost of $140,000. The machine has a salvage value of $14,000 and a useful life of 8 years. Sage's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. are the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are (r entered Oo not (ndent manually, If no entry Is reguired, select "No Entry" for the account titles and enter 0 for the amounts.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sage 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. Sage purchased equipment on January 2, 2017, for $78,900. At that time, the equipment had an estimated useful life of 10 years with a $4,900 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, Sage changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years
and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019.
2019
2018
$27,000
60,000
Straight-line
$27,000
Declining-balance
48,000
3. Sage purchased a machine on July 1, 2018, at a cost of $140,000. The machine has a salvage value of $14,000 and a useful life of 8 years. Sage's bookkeeper recorded straight-line
depreciation in 2018 and 2019 but failed to consider the salvage value.
Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the information provided. (Ignore taxes.) (Credit account titles are
utomiticallir indanted when amaunt Is entered, Do not Indent manually. If no entry is required, select "No Entry" or the account titles and enter 0 for the anmounts.)
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