Wk 4 E11-11 upload - the estimate has been changed. It is...

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(Depreciation-Change in Estiamate) Machinery purchased for $60,000 by Joe Montana Co, in 2000 was orginally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2005, it is determined that the total estimated life (including 2005) should be 10years with a salvage value of $4,500 at the end of the time.Assume straight line depreciation. A. Prepare the entry to correct the prior years depreciation, if necessary. No correcting entry is required, since the change in depreciation will be from the time
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Unformatted text preview: the estimate has been changed. It is always with prospective effect B. Prepare the entry to record depreciation for 2005. Cost 60,000 Salvage Value 4,000 Depreciable Value 56,000 Useful Life - years 8 Depreciation per year 7,000 Depreciation for 5 years 35,000 Book Value at end of 5 years 25,000 New Useful Life - years 10 Useful Life left - years 5 Revised Salvage Value 4,500 New Depreciable Value 20,500 New Depreciation per year 4,100 Journal Entry Depreciation Expense - Equipment 4,100 Accumulated Depreciation - Equipment 4,100...
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