Minnesota Company is in the process of preparing its financial statements for 2022. Assume that no entries
Question:
Minnesota Company is in the process of preparing its financial statements for 2022. Assume that no entries for any depreciation or accounting changes have been recorded in 2022. The following information related to depreciation of fixed assets is provided to you:
Minnesota purchased a machine on June 1, 2020, at a cost of $150,000. The machine has a salvage value of $6,000 and a useful life of 12 years. Minnesotas bookkeeper recorded straight-line depreciation in 2020 and 2021 but erroneously assumed a useful life of 10 years.
The entries to record the 2022 depreciation on the machine and the prior period adjustment will cause a net increase to Accumulated Depreciation of:
a.
$7,200
b.
$8,542
c.
$8,200
d.
$7,500
e.
$8,600
Oregon Company is in the process of preparing its financial statements for 2024. Assume that no entries for any depreciation or accounting changes have been recorded in 2024. The following information related to depreciation of fixed assets is provided to you:
Oregon purchased equipment on January 2, 2021, for $75,000. At that time, the equipment had an estimated useful life of 10 years with a $5,000 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2024, as a result of additional information, the company determined that the equipment has a remaining useful life of 8 years with a $3,000 salvage value.
Following all appropriate adjusting/closing journal entries, the 12/31/24 balance of accumulateddepreciation for the equipment will be:
a.
$33,750
b.
$5,750
c.
$6,375
d.
$9,875
e.
$27,375