Machinery purchased for $60,000 by Tom Brady Co in 2010 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time Depreciation has been entered for 5 years on this basis In 2015, it is determined that the total estimated life should be 10 years with a...

a No correcting entry is necessary because changes in estimate are hand ...

Machinery purchased for $60,000 by Tom Brady Co. in 2010 was originally estimated to have a life

Question:

Machinery purchased for $60,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 8 years with a of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2015, it is determined that the total estimated life should be 10 years with a of $4,500 at the end of that time. Assume straight-line depreciation.

Instructions
(a) Prepare the entry to correct the prior years’ depreciation, if necessary.
(b) Prepare the entry to record depreciation for 2015.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...