The Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $2,128,000. This cost included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $1,920,000 38,000 28,000 142,000 $2,128,000 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 2019 and 2020. In 2021, after the 2020 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 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2021 and any 2021 journal entries related to the change in depreciation methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)

The Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $2,128,000. This cost included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $1,920,000 38,000 28,000 142,000 $2,128,000 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 2019 and 2020. In 2021, after the 2020 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 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2021 and any 2021 journal entries related to the change in depreciation methods. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 13P: Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended...

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The Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $2,236,000. This cost included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,980,000 44,000 34,000 178,000 S 2,236,000 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 2019 and 2020. In 2021, after the 2020 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. • Record entry in 2021 due to the change in depreciation methods. • Record the 2021 adjusting entry for depreciation.
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