2.00 points At the end of the annual accounting period, December 31, Year 1, O\'
ID: 2550637 • Letter: 2
Question
2.00 points At the end of the annual accounting period, December 31, Year 1, O'Connor Company's records reflected the following for Machine A: Cost when acquired Accumulated depreciation S 30,600 10,400 During January Year 2, the machine was renovated at a cost of $15,800. As a result, the estimated life increased from five years to eight years, and the residual value increased from $4,600 to S8,600. The company uses straight-line depreciation. Required: . Prepare the journal entry to record the renovation. (If no entry Is required for a transactlon/event, select "No Journal entry required" In the first account fleld.) View transaction list Journal entry worksheet Record the cost of renovation for the machine. Note: Fnter dekits hefore credits. Date General Journal Debit Credit JanuaryExplanation / Answer
The original formula for the depreciation expense:
Depreciation expense= (Cost – residual value) * (1/useful life)
= (30600 - 4600 ) * (1/5)
= 5200
Journal entries to record the Cost of renovation for machine =
How old was the machine at the end of Year 1 ?
Answer = 2 years.
Total accumulated depreciation $10,400 / annual change in depreciation $5,200 = 2 Years
The impact of the renovation on the depreciation expense formula:
Depreciation expense= (Cost – residual value) * (1/useful life)
= [(30600 + 15800 - 10400) - 8600 ] * [1 / (8-2)]
= 4567
Date General Journal Debit Credit January Equipment 15800 Cash 15800Related Questions
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