Machinery purchased for $ 102,000 by Tom Brady Co. in 2010 was originally estima

Question

Machinery purchased for $ 102,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 8 years with a salvage value of $ 6,800 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2015, it is determined that the total estimated life should be 10 years with a salvage value of $ 7,650 at the end of that time. Assume straight-line depreciation.

a) 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.)

b) Prepare the entry to record depreciation for 2015. (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.)

Explanation / Answer

a. Prepare the entry to correct the prior years' depreciation, if necessary. No adjusting entry is necessary. b. Prepare the entry to record depreciation for 2008. Depreciation Expense 6,970 Accumulated Depreciation 6,970 =((102000-(11900*5))-7650)/(10-5)

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