Sunland Co. purchased equipment for $587,000 which was estimated to have a useful life of 10 years with a salvage value of $11,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2021, it is determined that the total estimated life should be 15 years with a salvage value of $4,600 at the end of that time. (a)   Prepare the entry (if any) to correct the prior years’ depreciation. (b)   Prepare the entry to record depreciation for

Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter9: Long-term Assets: Fixed And Intangible
Section: Chapter Questions
Problem 9.4BE: Revision of depreciation Equipment with a cost of 180,000 has an estimated residual value of 14,400,...
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Sunland Co. purchased equipment for $587,000 which was estimated to have a useful life of 10 years with a salvage value of $11,000 at the end of that time. Depreciation has been entered for 7 years on a straight-line basis. In 2021, it is determined that the total estimated life should be 15 years with a salvage value of $4,600 at the end of that time.

(a)   Prepare the entry (if any) to correct the prior years’ depreciation.
(b)   Prepare the entry to record depreciation for 2021.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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