Current Attempt in Progress Sweet Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. 2. Sweet purchased equipment on January 2, 2017, for $89,200. At that time, the equipment had an estimated useful life of 10 years with a $5,200 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,100 salvage value. 3. During 2020, Sweet changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 $27,000 $27,000 60,000 Straight-line Declining-balance 48,000 Sweet purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Sweet's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value.
Current Attempt in Progress Sweet Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. 2. Sweet purchased equipment on January 2, 2017, for $89,200. At that time, the equipment had an estimated useful life of 10 years with a $5,200 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,100 salvage value. 3. During 2020, Sweet changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 $27,000 $27,000 60,000 Straight-line Declining-balance 48,000 Sweet purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Sweet's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...
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Transcribed Image Text:Current Attempt in Progress
Sweet Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been
recorded in 2020. The following information related to depreciation of fixed assets is provided to you.
1.
2.
Sweet purchased equipment on January 2, 2017, for $89,200. At that time, the equipment had an estimated useful life of 10
years with a $5,200 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of
additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,100
salvage value.
3.
During 2020, Sweet changed from the double-declining-balance method for its building to the straight-line method. The
building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations
present depreciation on both bases for 2018 and 2019.
2019
Straight-line
Declining-balance 48,000
2018
$27,000 $27,000
60,000
Sweet purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $20,000 and a useful
life of 8 years. Sweet's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage
value.
Transcribed Image Text:(b)
Show comparative net income for 2019 and 2020. Income before depreciation expense was $320,000 in 2020, and was
$300,000 in 2019. (Ignore taxes.)
Income before depreciation expense $
Depreciation expense
Net income
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SWEET COMPANY
Comparative Income Statements
For the Years 2020 and 2019
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$
2020
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