for S Machinery purchased or69,600 by Sunland Ca in 2013 was original y estimate

Question

for S Machinery purchased or69,600 by Sunland Ca in 2013 was original y estimated to have a life o B years with a salvage value o $4 640 ut the end of that time. Depreciation has been entered or 5 years an this bess. In 2018, it is determined that the total estimated life should be 1 ycars with a salvage value of $5,220 at the end af that time. Assume straight-lina 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually) Account Titles and Explanation Debit Credit Prepere 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 Machiney related account.) Account Titles and Explanation Debit Credit

Explanation / Answer

1) No entry required Changes in useful life and salvage value does not require adjustments to prior period depreciation 2) Account Head & Description Depreciation expenses Accumulated depreciation - Machinery (to record the depreciation for 2018) Depreciation per annum from year 1 to year 5 = (69600-4640)/8 = $8120 Book value at the beginning of year 6 = $69600-(8120*5) = $29000 Depreciation per annum from 2018 onwards = (29000-5220)/10 = $2378

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