In January 2020, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no salvage value. At December 31, 2021, it is decided that the machinery has a remaining useful life of 20 years, starting with January 1, 2021. What entry(ies) should be made in 2021 to correctly record transactions related to machinery, assuming the machinery has no salvage value? The books have not been closed for 2021 and depreciation expense has not yet been recorded for 2021.
In January 2020, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no salvage value. At December 31, 2021, it is decided that the machinery has a remaining useful life of 20 years, starting with January 1, 2021. What entry(ies) should be made in 2021 to correctly record transactions related to machinery, assuming the machinery has no salvage value? The books have not been closed for 2021 and depreciation expense has not yet been recorded for 2021.
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
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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In January 2020, installation costs of $6,000 on new machinery were charged to Maintenance and Repairs Expense. Other costs of this machinery of $30,000 were correctly recorded and have been depreciated using the straight-line method with an estimated life of 10 years and no salvage value. At December 31, 2021, it is decided that the machinery has a remaining useful life of 20 years, starting with January 1, 2021. What entry(ies) should be made in 2021 to correctly record transactions related to machinery, assuming the machinery has no salvage value? The books have not been closed for 2021 and depreciation expense has not yet been recorded for 2021.
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