Error and Change in Estimate Depreciation Tarkington Co. purchased a machine on January 1, 2007, for $440,000.

Question:

Error and Change in Estimate—Depreciation Tarkington Co. purchased a machine on January 1, 2007, for $440,000. At that time it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2010, the firm’s accountant found that the entry for Depreciation expense had been omitted in 2008. In addition, management has informed the accountant that the company plans to switch to straight-line Depreciation, starting with the year 2010. At present, the company uses the sum of-the-years’-digits method for depreciating equipment. Prepare the general journal entries that should be made at December 31, 2010 to record these events. (Ignore tax effects.)

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... 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...