Question

0.1 Question 4 View Policies Show Attempt History Current Attempt in Progress Machinery purchased for $70,200 by Sheffield Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,680 at the er of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with salvage value of $5,265 at the end of that time. Assume straight-line depreciation. - Your answer is partially correct. Prepare the entry to correct the prior years' depreciation, if necessary. (If no entry is required, select "No entry for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit 4797 Depreciation Expense 4797 Accumulated Depreciation Machinery e Textbook and Media

Answer 1

Answer

No entry will be required as we will depreciate the machinery for the rest of the life.

It is mentioned that machine has been depreciated already for 5 years so book value after 5 years will be:

Depreciation per year = (Cost – Salvage Value) / No. of years

= ($70,200 – 4,680) / 8 Years

Depreciation per year = $8,190

Book Value = Cost – Depreciation for 5 years

= $70,200 – (8,190 * 5)

Book Value after 5 years = $29,250

And

Now it is mentioned that new life is 10 years and new salvage value is $5,265,

The machine is already has been depreciated for 5 years so now the remaining life is 5 years, so we will calculate new depreciation per year

New Depreciation per year = (Book Value – New Salvage Value) / Remaining life

= ($29,250 – 5,265) / 5 Years

New Depreciation per year = $4,797

Conclusion

There is no need for Adjustment entry as we will depreciate the remaining value for remaining period.

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