Question
Mirage Ltd. purchased a piece of equipment on January 1, 2016, for $1,350,000. At that time, it was estimated that the machine would have a
Mirage Ltd. purchased a piece of equipment on January 1, 2016, for
$1,350,000. At that time, it was estimated that the machine would have a 20year life and no residual value. On December 31, 2020, Mirages controller found that the entry for depreciation expense was omitted in error in 2017. In addition, Mirage planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2020. Mirage currently uses the straight-line method for depreciating equipment. The company has had a 30% tax rate for every year since 2015.
Show all calculations. Round all amounts to the nearest dollar.
- Prepare the general journal entries, if any, the accountant should make at January 1, 2020. Include income tax effects, if applicable.
- Prepare the general journal entries, if any, the accountant should make at December 31, 2020.
- What is the net book value of the equipment to be reported on the Statement of Financial Position at December 31, 2020?
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
FINANCIAL ACCOUNTING AND COSTING
Authors: Meera Gopi Krishna
1st Edition
979-8604687369
