Proper net income computation On January 1, 2020-Deestimated salvage value. The estimated useful life of the asset is 8 years and straight-linedepreciation is used by the company for all machines used in the business. An error was made inGempany purchased a machine that cost $72,000 and had no2020 because the total amount of the asset's cost was debited to an expense account for 2020 andno depreciation was recorded. Net income for 2020O as reported was $140,000. What is the properamount of net income that should have been reported in 2020?

Introduction: Depreciation: Decreasing value of fixed assets over its useful life period called as…

On January 1, 2020- D mpany purchased a machine that cost $72,000 and had no estimated salvage value. The estimated useful life of the asset is 8 years and straight-line depreciation is used by the company for all machines used in the business. An error was made in 2020 because the total amount of the asset's cost was debited to an expense account for 2020 an no depreciation was recorded. Net income for 2020 as reported was $140,000. What is the proper amount of net income that should have been reported in 2020?

On January 1, 2020- D mpany purchased a machine that cost $72,000 and had no estimated salvage value. The estimated useful life of the asset is 8 years and straight-line depreciation is used by the company for all machines used in the business. An error was made in 2020 because the total amount of the asset's cost was debited to an expense account for 2020 an no depreciation was recorded. Net income for 2020 as reported was $140,000. What is the proper amount of net income that should have been reported in 2020?

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 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...

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On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
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.
On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000
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Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a straight-line basis over a useful life of 10 years and used a residual value of $12,000. Chapmans depreciation expense for 2019 was $11,000. What was the original cost of the building? a. $98,000 b. $110,000 c. $122,000 d. $134,000
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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.
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