On January 1, 2010, equipment was purchased for $20,000. The entire purchase price was expensed immediately. The
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On January 1, 2010, equipment was purchased for $20,000. The entire purchase price was expensed immediately. The equipment has a useful life of 10 years with $0 expected salvage value. The company uses straight-line depreciation. On January 1, 2013, the equipment was sold for $11,000 cash. The incorrect expensing of the purchase price, along with the subsequent failure to recognize depreciation, was discovered in May 2013 after the books for 2012 had been closed.
(1) Make the necessary correcting entry in 2013.
(2) Describe any necessary corrections to the 2013 comparative income statement (which includes 2011 and 2012).
Salvage ValueSalvage 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...
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1 Depreciation expense of 2000 2000010 years should have been recognized in 2010 2011 and 2012 This ...View the full answer
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