Machinery purchased for $63,000 by Buffalo Co. in 2013 was originally estimated

Question

Machinery purchased for $63,000 by Buffalo 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 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

Explanation / Answer

Depreciation expense for prior 5 years (63000-4200)/8 7350 book value at the end of year five orginal cost 63,000 less:Accumulate dep (7350*5) 36750 book value at the end of year five 26,250 Remining useful life (10 -5) 5 years new salvage value 4,725 depreciation exp (26250-4725)/5 4305 journal entry to correct prior years depreciation No entry depreciation for 2018 Accounting titles & Explanations Debit Credit Depreciation expense 4,305 Accumulated depreciation 4,305

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