1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-year life and no salvage value. The machine cost P600,000 and was depreciated on a straight-line basis. On December 27, 2020, a P60,000 device that increased the machine's output by one fourth was added to the machine. The new device made no change in the machine's estimated life and salvage value. During the first week of January, 2024 the machine was completely overhauled at a cost of P180,000. The overhaul added three additional years to the machine's estimated life but did not change its salvage value. Prepare entries in general form to record: d) the 2021 depreciation e) overhauling of the machine f) the 2024 depreciation

1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-year life and no salvage value. The machine cost P600,000 and was depreciated on a straight-line basis. On December 27, 2020, a P60,000 device that increased the machine's output by one fourth was added to the machine. The new device made no change in the machine's estimated life and salvage value. During the first week of January, 2024 the machine was completely overhauled at a cost of P180,000. The overhaul added three additional years to the machine's estimated life but did not change its salvage value. Prepare entries in general form to record: d) the 2021 depreciation e) overhauling of the machine f) the 2024 depreciation

Name: 1. On January 2, 2017, Greenwood Company purchased and placed in oper
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Description: 1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-yearlife and no salvage value. The machine cost P600,000 and was depreciated on a straight-line basis. On December 27,2020, a P60,000 device

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 4CE: Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
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