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March 30 SI Session

# March 30 SI Session - [Type text SI Session 1 Assume that...

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[Type text] March 30, 2009 SI Session 1. Assume that Bloomer Company purchased a new machine on January 1, 2008, for \$80,000. The machine has an estimated useful life of nine years and a residual value of \$8,000. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2010, Bloomer discovered that the machine would not be useful beyond December 31, 2013, and estimated its value at that time to be \$2,000. a) Calculate the depreciation expense, the accumulated depreciation, and the book value of the asset for each year 2008 to 2013. b) Was the depreciation recorded in 2008 and 2009 wrong? If so, why was it not corrected?

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2. Assume that Gonzalez Company purchased an asset on January 1, 2006 for \$60,000. The asset had an estimated useful life of six years and an estimated residual value of \$6,000. The company used the straight-line method to depreciate the asset. On July 1, 2008, the asset was sold for \$40,000 cash. a) Make the journal entry to record depreciation for 2008. Also record all transactions necessary for the sale of the asset.
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March 30 SI Session - [Type text SI Session 1 Assume that...

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