Exercise 11-11 Machinery purchased for $63,000 by Stellar Co. in 2013 was origin

Question

Exercise 11-11 Machinery purchased for $63,000 by Stellar Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,200 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2018, it is determined that the total estimated life should be 10 years with a salvage value of $4,725 at the end of that time. Assume straight-line depreciation 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.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the entry to record depreciation for 2018. (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.) Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Straight line depreciation (63000-4200)/8 7350 book value at the end of year five original cost 63,000 Accumulated depreciaiton (7350*5) 36750 book value at the end of year five 26,250 book value at the beginning of year six 26,250 less:Revised salvage value -4,725 cost to be depreciated 21,525 revised useful life (10 years - 5 years) 5 Depreciation expense 4305 Account titles & Explanations Debit Credit No Entry year 2018 Account titles & Explanations Debit Credit Depreciation expense 4,305 Accumulated depreciation -machinery 4,305

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