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Machinery purchased for $60,600 by Crane Co. in 2016 was originally estimated to have a life of 8 years with a salvage value

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Answer #1

1.

No entry required to correct the prior year's depreciation, changes are only made in the current year not for the prior year.

2.

Old depreciation expense per year = (Cost - Salvage value) / Years

= ($60,600 - $4,040) / 8

= $7,070

Accumulated depreciation for 5 years = $7,070 * 5

= $35,350

Carrying value at the beginning of 2021 = Cost - Accumulated depreciation

= $60,600 - $35,350

= $25,250

Remaining years = 10 - 5

= 5 years

Depreciation expense for 2021 = (Carrying value - Salvage value) / Remaining years

= ($25,250 - $4,545) / 5 years

= $4,141

Accounts titles and explanation Debit Credit
Depreciation expense - $4,141
...Accumulated depreciation $4,141
(To record the depreciation expense)
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