Exercise 11-11 Machinery purchased for $63,600 by Buffalo Co. in 2013 was origin

Question

Exercise 11-11 Machinery purchased for $63,600 by Buffalo Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $4,240 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 $4,770 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

Explanation / Answer

a No entry is required to correct the prior year's depreciation b Accumulated depreciation till year 5 = (63600-4240)/8*5= 37100 Book value at the end of year 5 = 63600-37100= 26500 Depreciation expense 4346 =(26500-4770)/5          Accumulated depreciation 4346

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