Question
Collins Corporation purchased office equipment at the beginning of 2011 and capitalized a cost of $1,972,000. This cost figure included the following expenditures: Purchase price
Collins Corporation purchased office equipment at the beginning of 2011 and capitalized a cost of $1,972,000. This cost figure included the following expenditures: |
Purchase price | $ | 1,810,000 | |
Freight charges | 26,000 | ||
Installation charges | 16,000 | ||
Annual maintenance charge | 120,000 | ||
Total | $ | 1,972,000 | |
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2011 and 2012. |
REQUIRED: |
1. Ignoring taxes, prepare the appropriate correcting entry for the equipment capitalization error. 2. Ignoring income taxes, prepare any journal entries related to the change in depreciation methods. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started