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On January 1, 2019, Plover Brothers Ltd. purchased a machine for $495,000 and depreciated it using the

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On January 1, 2019, Plover Brothers Ltd. purchased a machine for $495,000 and depreciated it using the straight-line method with an estimated useful life of eight years with no residual value. On January 1, 2022, Plover determined that the machine had a useful life of only six years from the date of acquisition, but will have a residual value of $45,000. An accounting change was made in 2022 to reflect these additional facts. At December 31, 2023, what should be the balance in the accumulated depreciation account for this machine?

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Related Book For  answer-question
Fundamental Accounting Principles Volume 2

Fundamental Accounting Principles Volume 2

ISBN: 9781260881332

17th Canadian Edition

Authors: Kermit D. Larson, Heidi Dieckmann, John Harris

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In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue

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