Machinery purchased for $75,000 by Sheridan Co. in 2013 was originally estimated
ID: 340534 • Letter: M
Question
Machinery purchased for $75,000 by Sheridan Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $5,000 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 $5,625 at the end of that time. Assume straight-line depreciation.
Account Titles and Explanation
Debit
Credit
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Account Titles and Explanation
Debit
Credit
Machinery purchased for $75,000 by Sheridan Co. in 2013 was originally estimated to have a life of 8 years with a salvage value of $5,000 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 $5,625 at the end of that time. Assume straight-line depreciation.
Explanation / Answer
Book value in starting of 2018 = $75,000 - ($75,000 - $5,000) / 8 x 5 = $31,250
No. Account Titles and Explanation Debit Credit (a) No entry 0 (b) Depreciation $5,125 Accumulated Depreciation $5,125 ($31,250 - $5,625) / 5Related Questions
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