Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation expense at the end of each calendar year. On January 11, 2017, the company purchased a machine costing $90,000. The machine's useful life was estimated to be 12 years with an estimated residual value of $18,000. Depreciation for partial years is recorded to the nearest full month. In 2021, after almost five years of experience with the machine, management decided to revise its estimated life from 12 years to 20 years. No change was made in the estimated residual value. The revised estimate of the useful life was decided prior to recording annual depreciation expense for the year ended December 31, 2021. a. Prepare journal entries in chronological order for the given events, beginning with the purchase of the machinery on January 11, 2017. Show separately the recording of depreciation expense in 2017 through 2021. b. What factors may have caused the company to revise its estimate of the machine's useful life?

Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation expense at the end of each calendar year. On January 11, 2017, the company purchased a machine costing $90,000. The machine's useful life was estimated to be 12 years with an estimated residual value of $18,000. Depreciation for partial years is recorded to the nearest full month. In 2021, after almost five years of experience with the machine, management decided to revise its estimated life from 12 years to 20 years. No change was made in the estimated residual value. The revised estimate of the useful life was decided prior to recording annual depreciation expense for the year ended December 31, 2021. a. Prepare journal entries in chronological order for the given events, beginning with the purchase of the machinery on January 11, 2017. Show separately the recording of depreciation expense in 2017 through 2021. b. What factors may have caused the company to revise its estimate of the machine's useful life?

Name: EXERCISE 9.6 Revision of Depreciation Estimates e LO9-3Swindall Indus
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Description: EXERCISE 9.6 Revision of Depreciation Estimates e LO9-3Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciationexpense at the end of each calendar year. On January 11, 2017, the co

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

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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EXERCISE 9.6 Revision of Depreciation Estimates e LO9-3
Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation
expense at the end of each calendar year. On January 11, 2017, the company purchased a machine costing $90,000. The
machine's useful life was estimated to be 12 years with an estimated residual value of $18,00o. Depreciation for partial years is
recorded to the nearest full month.
In 2021, after almost five years of experience with the machine, management decided to revise its estimated life from 12 years
to 20 years. No change was made in the estimated residual value. The revised estimate of the useful life was decided prior to
recording annual depreciation expense for the year ended December 31, 2021.
a. Prepare journal entries in chronological order for the given events, beginning with the purchase of the machinery on
January 11, 2017. Show separately the recording of depreciation expense in 2017 through 2021.
b. What factors may have caused the company to revise its estimate of the machine's useful life?

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