Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Riverbed Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The

Riverbed Company is in the process of preparing its financial statements for 2020. Assume that no entries for depreciation have been recorded in 2020. The following information related to depreciation of fixed assets is provided to you. 1. 2. Riverbed purchased equipment on January 2, 2017, for $80,400. At that time, the equipment had an estimated useful life of 10 years with a $5,400 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2020, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,000 salvage value. During 2020, Riverbed changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $320,000. It had a useful life of 10 years and a salvage value of $32,000. The following computations present depreciation on both bases for 2018 and 2019. 2019 2018 Straight-line $28,800 $28,800 Declining-balance 51,200 64,000 3. Riverbed purchased a machine on July 1, 2018, at a cost of $130,000. The machine has a salvage value of $20,000 and a useful life of 8 years. Riverbed's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider the salvage value. Show comparative net income for 2019 and 2020. Income before depreciation expense was $300,000 in 2020, and was $320,000 in 2019. (Ignore taxes.) RIVERBED COMPANY Comparative Income Statements For the Years 2020 and 2019 Income before depreciation expense $ Depreciation expense Net income +A $ 2020 300000 49075 i 2019 320000 74950 250925 $ 245050

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

More Books

Students also viewed these Accounting questions

Question

differentiate the function ( x + 1 ) / ( x ^ 3 + x - 6 )

Answered: 1 week ago