Pete?s Propellers Company showed the following information in its Property, Plant, and Equipment subledger regarding Machine #5027.
Question:
Pete?s Propellers Company showed the following information in its Property, Plant, and Equipment subledger regarding Machine #5027.
On January 7, 2020, the machine blade cracked and it was replaced with a new one costing $10,400 purchased for cash (the old blade was scrapped). The new blade had an estimated residual value of $1,000 and an estimated life of five years and would continue to be depreciated using the straight-line method. During 2020, it was determined that the useful life on the metal housing should be increased to a total of 20 years instead of 15 years and that the residual value should be increased to $8,600.
Required
1. Prepare the entry to record the purchase of the replacement blade.
2. Calculate the total depreciation expense to be recorded on Machine #5027 for 2020.
Step by Step Answer:
Fundamental Accounting Principles Volume I
ISBN: 978-1260305821
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann