The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,038,000. This cost included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,870,000 33,000 23,000 112,000 $ 2,038,000 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 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 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024 and any 2024 journal entries 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. Round your final answers to the nearest whole dollar. View transaction list Journal entry worksheet 1 2 3 Record the entry to correct incorrect accounts. Note: Enter debits before credits. Event 1 General Journal Debit Credit
The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,038,000. This cost included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,870,000 33,000 23,000 112,000 $ 2,038,000 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 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 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024 and any 2024 journal entries 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. Round your final answers to the nearest whole dollar. View transaction list Journal entry worksheet 1 2 3 Record the entry to correct incorrect accounts. Note: Enter debits before credits. Event 1 General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,038,000. This cost included
the following expenditures:
Purchase price
Freight charges
Installation charges
Annual maintenance charge
Total
$ 1,870,000
33,000
23,000
112,000
$ 2,038,000
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 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 & 2. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024 and
any 2024 journal entries 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. Round your final
answers to the nearest whole dollar.
View transaction list
Journal entry worksheet
1 2 3
Record the entry to correct incorrect accounts.
Note: Enter debits before credits.
Event
1
General Journal
Debit
Credit
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