year 8 it is determined that the total estimated life should be 15 years with a

Year 8 it is determined that the total estimated life

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(year 8), it is determined that the total estimated life should be 15 years with a salvage value of $5,000 at the end of that time. No Entry Required Questions: What is the journal entry to correct the prior years’ depreciation? Calculate the depreciation expense for 2014. Depreciation LO 2 Explain the concept of depreciation.
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10-28 Equipment $510,000 Plant Assets: Accumulated depreciation 350,000 Net book value (NBV) $160,000 Balance Sheet (Dec. 31, 2014) After 7 years Equipment cost $510,000 Salvage value - 10,000 Depreciable base 500,000 Useful life (original) 10 years Annual depreciation $ 50,000 x 7 years = $350,000 First, establish NBV at date of change in estimate. First, establish NBV at date of change in estimate. Depreciation LO 2 Explain the concept of depreciation.
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10-29 Depreciation Expense calculation for 2014. Depreciation Expense calculation for 2014. Depreciation Expense 19,375 Accumulated Depreciation 19,375 Journal entry for 2014 and future years. Depreciation LO 2 Explain the concept of depreciation. After 7 years Net book value $160,000 Salvage value (new) - 5,000 Depreciable base 155,000 Useful life remaining 8 years Annual depreciation $ 19,375
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10-30 Ordinary Repairs - expenditures to maintain the operating efficiency and productive life of the unit. Debit - Repair (or Maintenance) Expense. Referred to as revenue expenditures . Additions and Improvements - costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset. Debit - the plant asset affected. Referred to as capital expenditures . LO 3 Distinguish between revenue and capital expenditures, and explain the entries for each. Expenditures During Useful Life Plant Assets
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10-31 Companies dispose of plant assets in three ways —Retirement, Sale, or Exchange (appendix). LO 4 Explain how to account for the disposal of a plant asset. Record depreciation up to the date of disposal . Eliminate asset by (1) debiting Accumulated Depreciation, and (2) crediting the asset account. Illustration 10-18 Plant Asset Disposals Plant Asset Disposals
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10-32 Retirement of Plant Assets LO 4 Explain how to account for the disposal of a plant asset. No cash is received. Decrease (debit) Accumulated Depreciation for the full amount of depreciation taken over the life of the asset. Decrease (credit) the asset account for the original cost of the asset. Plant Asset Disposals
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10-33 Illustration: Hobart Enterprises retires its computer printers, which cost $32,000. The accumulated depreciation on these printers is $32,000. Prepare the entry to record this retirement. LO 4 Explain how to account for the disposal of a plant asset. Accumulated Depreciation 32,000 Equipment 32,000 Question: What happens if a fully depreciated plant asset is still useful to the company? In this case, the assets and its Accu. Dep. Contenue to be reported in the B/S, without further depreciation adjusted, until the company retire the asset.
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