Problem 11-14 (P11-14) Changes and Corrections of Depreciation
During 2010 the controller of the Ryel Company asked you to prepare
correcting journal entries for the following three situations:
1. Machine A was purchased for $50,000 on January 1, 2005.
Straight-line depreciation has been recorded for 5 years, and the
Accumulated depreciation account has a balance of $25,000. The estimated
residual value remains at $5,000, but the service life is now estimated
to be one year longer than estimated originally.
2. Machine B was purchased for $40,000 on January 1, 2008. It had an
estimated residual value of $5,000 and an estimated service life of 10
years. It has been depreciated under the double-declining-balance method
for two years. Now, at the beginning of the third year, Ryel has
decided to change to the straight-line method.
3. Machine C was purchased for $20,000 on January 1, 2009.
Double-declining-balance depreciation has been recorded for one year.
The estimated residual value of the machine is $2,000 and the estimated
service life is five years. The computation of the depreciation
erroneously included the estimated residual value.
Prepare the necessary correcting journal entries for each situation.
Also prepare the journal entry necessary for each situation to record
the depreciation for 2010. (Assume that the debit is to Depreciation
Expense.)
Click here for the solution: During 2010 the controller of the Ryel Company asked you to prepare correcting journal entries for the following three situations
