Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 8, Problem 8.5E
Change in Estimate
Assume that Bloomer Company purchased a new machine on January 1, 2016, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use the straight-line method of
Required
- Calculate the depreciation expense,
accumulated depreciation , and book value of the asset for each year 2016 to 2021. - Was the depreciation recorded wrong in 2016 and 2017? If so, why was it not corrected?
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Assume that Bloomer Company purchased a new machine on January 1, 2017, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2019, Bloomer discovered that the machine would not be useful beyond December 31, 2022, and estimated its value at that time to be $2,000.
Required:
1. Calculate the depreciation expense, accumulated depreciation, and book value of the asset for each year 2017 to 2022. If necessary, round any depreciation calculations to the nearest dollar.
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On April 2, 2017, Victor, Inc. acquired a new piece of filtering equipment. The cost of the equipment was $220,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 10 years.
If Victor uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, 2018 will be:
Wildhorse Company purchaseda hot tub for $ 11,790 on January 1, 2016. Straight-line depreciation is used, based on a 6-year life and
a $ 1,890 salvage value. In 2018, the estimates are revised. Wildhorse now feels the hot tub will be used until December 31, 2020,
when it can be sold for $ 885.
Compute the 2018 depreciation.
Depreciation expense, 2018
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Financial Accounting: The Impact on Decision Makers
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