Machinery purchased for $66,000 by Nash Co. in 2013 was originally estimated to
ID: 2517655 • Letter: M
Question
Machinery purchased for $66,000 by Nash Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2018, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.
(a)
Account Titles and Explanation
Debit
Credit
SAVE FOR LATER
SUBMIT ANSWER
(b)
Account Titles and Explanation
Debit
Credit
Machinery purchased for $66,000 by Nash Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2018, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.
Explanation / Answer
Journal entries
date
explanation
debit
credit
A-
No entry is needed for the correction
B-
Depreciation expense-equipment
4510
accumulated depreciation- equipment
4510
cost of machine
66000
less scrap value
4400
amount to be depreciated
61600
years to maturity
8
annual depreciation
61600/8
7700
Accumulated depreciation upto year 5
7700*5
38500
Book value at the end of year 5
66000-38500
27500
new amount to be depreciated
27500-4950
22550
life remaining in years
5
annual depreciation
22550/5
4510
Journal entries
date
explanation
debit
credit
A-
No entry is needed for the correction
B-
Depreciation expense-equipment
4510
accumulated depreciation- equipment
4510
cost of machine
66000
less scrap value
4400
amount to be depreciated
61600
years to maturity
8
annual depreciation
61600/8
7700
Accumulated depreciation upto year 5
7700*5
38500
Book value at the end of year 5
66000-38500
27500
new amount to be depreciated
27500-4950
22550
life remaining in years
5
annual depreciation
22550/5
4510
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