Exercise 11-11 Machinery purchased for $75,000 by Headland Co. in 2013 was origi
ID: 2526363 • Letter: E
Question
Exercise 11-11 Machinery purchased for $75,000 by Headland Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $5,000 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 $5,625 at the end of that time. Assume straight-line depreciation. Your answer is partially correct. Try again. Prepare the entry to correct the prior year's depreciation, if necessary. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Accumulated Depreciation-Machinery 5125 Depreciation Expense SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXTExplanation / Answer
SOLUTION
* 1. No correcting entry necessary because changes in estimate handled in the current and prospective periods.
**2. Depreciation prior to change = ($75,000 - $5,000) / 8 = $8,750
Book value as on 1/1/2018 = $75,000 - ($8,750*5) = $31,250
Remaining useful life - 10 - 5 = 5 years
Revised depreciation = ($31,250 - $5,625) / 5 = $5,125
S.No. Account titles and Explanation Debit ($) Credit ($) 1. No Entry Required* 2. Depreciation Expense** 5,125 Accumulated Depreciation-Machinery 5,125 (To record the depreciation expense for 2018)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.