On June 5, 20X3, Fairborn, Inc., purchased a new cutting machine for use in its factory. The machine cost \($15,000.00\) and has an estimated salvage value of \($1,000.00\) and an estimated useful life of five years. Fairborn used the double declining-balance method of depreciation. The bookkeeper prepared the following plant asset record.

Instructions:

1. Find the error in the plant asset record.

2. Write a written explanation of the error to the bookkeeper. In your explanation, give the correct calculation.

Transcribed Image Text:

PLANT ASSET RECORD, No. 305 Description Cutting Machine Date Bought June 5, 20X3 Estimated Useful Life 5 years January 5, 20X6 Disposed of: Date YEAR 20X3 General Ledger Account No. 1150 General Ledger Account Factory Equipment Serial Number G77U3JK298 Estimated Salvage Value $1,000.00 Discarded ANNUAL DEPRECIATION EXPENSE 5,600.00 Original $15,000.00 Cost Double Declining- Depreciation Method Balance Sold Traded Disposal Amount zero ACCUMULATED DEPRECIATION 5,600.00 ENDING BOOK VALUE 9,400.00