TTT Company purchased a machine some years ago. At the end of the current year, the company
Question:
TTT Company purchased a machine some years ago. At the end of the current year, the company revalued the machine to its fair value. The machine has the following characteristics at the end of the current year:
Original cost | $1,250,000 |
Residual value | $50,000 |
Estimated useful life (from acquisition date) | 10 years |
Years of use up to end of current year | 4 years |
Estimated useful life remaining (after current year-end) | 6 years |
Fair value at end of current year | $950,000 |
Depreciation method | Straight-line |
Requirements
a. | Calculate the depreciation expense for the years prior to the revaluation. |
b. | Calculate the depreciation expense for the years following the revaluation. |
c. | Record the journal entry for the revaluation adjustment using the elimination method. |
d. | Assuming no other changes in estimates or revaluations, show the following three amounts at the end of the 10 years of the equipment's life: gross carrying value, accumulated depreciation, net carrying value. Do this for the historical cost method as well as for the revaluation method. |
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