Gundrum Company purchased equipment on January 1, 2009 for $850,000. The equipment was expected to have a

Question:

Gundrum Company purchased equipment on January 1, 2009 for $850,000. The equipment was expected to have a useful life of 10 years and a salvage value of $30,000. Gundrum uses the straight-line method of depreciation. At the beginning of 2014, Gundrum determined the total estimated life of the equipment was 13 years and the residual value would be $10,000 at the end of that time.

Required:

Prepare any entry needed in 2014 to account for this change.

Salvage Value
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...