Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $1,936,000. This cost figure included the following expenditures: Purchase price

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $1,936,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $1,780,000 23,000 13,000 120,000 $1,936,000 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 2019 and 2020. In 2021, after the 2020 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2021. 2. Ignoring income taxes, prepare any 2021 journal entry(s) related to the change in depreciation methods. Journal entry worksheet 1 > Record the correcting entry for the equipment capitalization error discovered in 2021. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Required 1 Required 2 Ignoring income taxes, prepare any 2021 journal entry(s) related to the change in depreciation methods. transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the depreciation for the year. Note: Enter debits before credits. Transaction General Journal Debit Credit 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Reporting

Authors: Alan Melville

7th Edition

1292293128, 9781292293127

More Books

Students also viewed these Accounting questions

Question

Consider a M/G/1 system with E[S] Answered: 1 week ago

Answered: 1 week ago

Question

5. Explain how to install a performance management program.

Answered: 1 week ago