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(a)
Account Titles and Explanation
Debit
Credit
Account Titles and Explanation
Debit
Credit
Machinery purchased for $73,800 by Wildhorse Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,920 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 $5,535 at the end of that time. Assume straight-line depreciation.Warning
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(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.)Account Titles and Explanation
Debit
Credit
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
a)Depreciation expense (original) =[cost-salvage]/useful life
= [73800-4920]/8
= 8610
Total depreciation for 5 years : 8610*5= 43050
With new estimation ,
Remaining useful life = 10-5 =5 years
Book value = 73800-43050= 30750
Depreciation (new)= [30750-5535]/5
= 25215/5
= 5043
Date Account Debit credit a No adjustment entry is needed for prior years a depreciation is prospectively adjusted b Depreciation expense 5043 Accumulated depreciation-machinery 5043 [depreciation for 2018 recorded]Related Questions
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