Premium Doors Inc. purchased equipment on January 1, 2013, for $250,000. At that time it was estimated
Question:
Premium Doors Inc. purchased equipment on January 1, 2013, for $250,000. At that time it was estimated that the equipment would have a 5-year life and no salvage value. On December 31, 2014, the firm’s accountant found that the entry for depreciation expense had been omitted in 2013. In addition, management has informed the accountant that the company plans to switch to the sum-of-the-years’-digits method for depreciating equipment, starting with the year 2014. At present, the company uses the straight-line method of depreciation.
Instructions
Prepare the general journal entries the accountant should make at December 31, 2014. (Ignore tax effects.)
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...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield