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Exercise 11-11 (Part Level Submission) Machinery purchased for $73,800 by Monty

ID: 2543562 • Letter: E

Question

Exercise 11-11 (Part Level Submission)

Machinery purchased for $73,800 by Monty Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,920 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 $5,535 at the end of that time. Assume straight-line depreciation.

(a)

Account Titles and Explanation

Debit

Credit

LINK TO TEXT

LINK TO TEXT

SAVE FOR LATER

SUBMIT ANSWER

(b)

Account Titles and Explanation

Debit

Credit

LINK TO TEXT

LINK TO TEXT

SAVE FOR LATER

SUBMIT ANSWER

Exercise 11-11 (Part Level Submission)

Machinery purchased for $73,800 by Monty Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,920 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 $5,535 at the end of that time. Assume straight-line depreciation.

(a)

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

LINK TO TEXT

LINK TO TEXT

Attempts: 1 of 2 used

SAVE FOR LATER

SUBMIT ANSWER

(b)

Prepare the entry to record depreciation for 2018. (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. Use Machinery related account.)

Account Titles and Explanation

Debit

Credit

LINK TO TEXT

LINK TO TEXT

Attempts: 0 of 2 used

SAVE FOR LATER

SUBMIT ANSWER

Explanation / Answer

(a)

No entry is required to correct the prior years depreciation.

(b)

Depreciation under Straight line method = (cost - salvage value) / useful life

= (73,800 - 4,920) / 8

= 8,610

Accumulated depreciation from 2013 to 2017 = 8,610 * 5 years = 43,050

Carrying value at the beginning of 2018 = Cost - Accumulated depreciation = 73,800 - 43,050 = 30,750

Revised useful life = 10 years

Revised salvage value = 5,535

Remaining useful life = 10 - 5 = 5 years

Depreciation under Straight line method from the year 2018 = (carrying value - salvage value) / useful life

= (30,750 - 5,535) / 5

= 5,043

Depreciation for the year 2018 = 5,043

Depreciation expense 5,043 Accumulated depreciation 5,043