INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
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Chapter 11, Problem 11.23E
Change in principle; change in depreciation methods
• LO11–2, LO11–6
Alteran Corporation purchased office equipment for $1.5 million in 2015. The equipment is being
Required:
Prepare the
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Problem 11-11 (Algo) Error correction; change in depreciation method [LO11-2, 11-6, 11-7]
Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $2,130,000. This cost figure
included the following expenditures:
Purchase price
Freight charges
Installation charges
Annual maintenance charge
Total
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance
method was used to determine depreciation expense for 2022 and 2023.
In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method
for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included
one year of annual maintenance charges for the equipment.
Required:
1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024.
2.…
Brief Exercise 11-15 (Algo) Change in principle; change in depreciation method [LO11-6]
At the beginning of 2022, Robotics Incorporated acquired a manufacturing facility for $131 million $10.1 million of the purchase price
was allocated to the building. Depreciation for 2022 and 2023 was calculated using the straight-line method, a 20-year useful life, and
a $2.1 million residual value. In 2024, the company switched to the double-declining-balance depreciation method
What is depreciation on the building for 2024?
Note: Do not round intermediate calculations. Enter your answer in whole dollars rounded to the nearest whole number.
Depreciation
Exercise 11-11 (Algo) Disposal of property, plant, and equipment; partial periods (LO11-2]
On July 1, 2016, Farm Fresh Industries purchased a specialized delivery truck for $219,000. At the time, Farm Fresh estimated the truck
to have a useful life of eight years and a residual value of $27,000. On March 1, 2021, the truck was sold for $88,000. Farm Fresh uses
the straight-line depreciation method for all of its plant and equipment. Partial-year depreciation is calculated based on the number of
months the asset is in service.
Required:
1. Prepare the journal entry to update depreciation in 2021.
2. Prepare the journal entry to record the sale of the truck.
3. Assuming that the truck was instead sold for $125,000, prepare the journal entry to record the sale.
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Reg 1 and 2
Reg 3
Prepare the journal entries to update depreciation in 2021 and record the sale of the truck. (If no entry is required…
Chapter 11 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 11 - Prob. 11.1QCh. 11 - Depreciation is a process of cost allocation, not...Ch. 11 - Identify and define the three characteristics of...Ch. 11 - Discuss the factors that influence the estimation...Ch. 11 - What is meant by depreciable base? How is it...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Why are time-based depreciation methods used more...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Briefly explain the differences and similarities...Ch. 11 - Prob. 11.12QCh. 11 - Prob. 11.13QCh. 11 - What are some of the simplifying conventions a...Ch. 11 - Explain the accounting treatment required when a...Ch. 11 - Explain the accounting treatment and disclosures...Ch. 11 - Explain the steps required to correct an error in...Ch. 11 - Prob. 11.18QCh. 11 - Prob. 11.19QCh. 11 - Prob. 11.20QCh. 11 - Prob. 11.21QCh. 11 - Briefly explain the differences between U.S. GAAP...Ch. 11 - Under U.S. GAAP, litigation costs to successfully...Ch. 11 - Cost allocation At the beginning of its fiscal...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Depreciation methods; partial periods LO112 Refer...Ch. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Group depreciation; disposal LO112 Mondale Winery...Ch. 11 - Prob. 11.8BECh. 11 - Prob. 11.9BECh. 11 - Prob. 11.10BECh. 11 - Change in principle; change in depreciation method...Ch. 11 - Prob. 11.12BECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.14BECh. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Subsequent expenditures LO119 Demmert...Ch. 11 - Depreciation methods LO112 On January 1, 2018,...Ch. 11 - Prob. 11.2ECh. 11 - Depreciation methods; partial periods LO112 [This...Ch. 11 - Depreciation methods; asset addition; partial...Ch. 11 - Depreciation methods; solving for unknowns LO112...Ch. 11 - Depreciation methods; partial periods LO112 On...Ch. 11 - Prob. 11.7ECh. 11 - IFRS; depreciation; partial periods LO112, LO1110...Ch. 11 - IFRS; revaluation of machinery; depreciation;...Ch. 11 - Disposal of property, plant, and equipment LO112...Ch. 11 - Disposal of property, plant, and equipment;...Ch. 11 - Depreciation methods; disposal; partial periods ...Ch. 11 - Group depreciation LO112 Highsmith Rental Company...Ch. 11 - Double-declining-balance method; switch to...Ch. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Cost of a natural resource; depletion and...Ch. 11 - Prob. 11.18ECh. 11 - Prob. 11.19ECh. 11 - Prob. 11.20ECh. 11 - Prob. 11.21ECh. 11 - Change in estimate; useful life and residual value...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Change in principle; change in depreciation...Ch. 11 - Prob. 11.25ECh. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - IFRS; impairment; property, plant, and equipment ...Ch. 11 - IFRS; Impairment; property, plant, and equipment ...Ch. 11 - Impairment; property, plant, and equipment LO118...Ch. 11 - Prob. 11.30ECh. 11 - IFRS; impairment; goodwill LO1110 IFRS Refer to...Ch. 11 - Prob. 11.32ECh. 11 - FASB codification research LO118 The FASB...Ch. 11 - Prob. 11.34ECh. 11 - Subsequent expenditures LO119 Belltone Company...Ch. 11 - Prob. 11.36ECh. 11 - Concept s; terminology LO111 through LO116, LO118...Ch. 11 - Retirement and replacement depreciation Appendix...Ch. 11 - Depreciation methods; change in methods LO112,...Ch. 11 - Prob. 11.2PCh. 11 - Depreciation methods; partial periods Chapters 10...Ch. 11 - Partial- year depreciation; asset addition;...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Prob. 11.8PCh. 11 - Straight-line depreciation; disposal; partial...Ch. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Prob. 11.12PCh. 11 - Depreciation and depletion; change in useful life;...Ch. 11 - Analysis Case 111 Depreciation, depletion, and...Ch. 11 - Communication Case 112 Depreciation LO111 At a...Ch. 11 - Judgment Case 113 Straight-line method; composite...Ch. 11 - Prob. 11.4BYPCh. 11 - Prob. 11.5BYPCh. 11 - Prob. 11.7BYPCh. 11 - Prob. 11.8BYPCh. 11 - Research Case 119 FASB codification; locate and...Ch. 11 - Ethics Case 1110 Asset impairment LO118 At the...Ch. 11 - Prob. 11.11BYPCh. 11 - Prob. 11.13BYPCh. 11 - Real World Case 1114 Disposition and depreciation;...Ch. 11 - Real World Case 1115 Depreciation and depletion...Ch. 11 - Prob. 11.16BYPCh. 11 - Target Case LO112, LO118, LO119 Target...
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- 13 On January 2, 2020, VSG purchased a transportation equipment costing P2,400,000. The new asset has an estimated useful life of 8 years with no salvage value. VSG depreciates this type of asset using the straight-line method. On January 1, 2022, VSG determined that the machine had a remaining useful life of 6 years from the date of acquisition with no salvage value. How much is the revised depreciation for 2022?arrow_forward! Required information Problem 7-5B Determine depreciation under three methods (LO7-4) [The following information applies to the questions displayed below.) Cheetah Copy purchased a new copy machine. The new machine cost $126,000 including installation. The company estimates the equipment will have a residual value of $31,500. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year 1 3 Required: Pront Hours Used 2,000 2,000 2,000 3,200 Problem 7-58 Part 1arrow_forwardQ-5 Cactus Inc. purchased a machine on January 1, 2022, at a cost of $60,000. The machine is expected to have an estimated residual value of $5,000 at the end of its five-year useful life. The company capitalized the machine and depreciated it in 2022 using the double-declining-balance method of depreciation. The company has a policy of using the straight-line method to depreciate equipment, as this method best reflects the benefits to the company over the life of its machinery. However, the company accountant neglected to follow company policy when he used the double-declining-balance method. Net income for the year ended December 31, 2022, was $53,000 as a result of depreciating the machine incorrectly. Cactus has not closed its books for 2022 yet. Cactus uses IFRS to prepare its financial statements. Required Using the method of depreciation that the company normally follows, prepare the correcting entry and determine the corrected net income. Assume the books of account have not…arrow_forward
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