Rifhan products use straight-line depreciation on all its depreciable assets. The accounts are adjusted and closed at the end of each calendar year. On January 4, 1999, the corporation purchased machinery for cash at a cost of Rs 90,000. Its useful life was estimated to be 10 years with a residual value of Rs 22,000. Depreciation for partial years is recorded to the nearest full month. In 2001, after almost 4 years of experience with the equipment, management decided that the estimated life of the equipment should be revised from 10 years to 7 years. No change was made in the estimate of residual value. The revised estimate of useful life was decided on prior to recording to depreciation for the period ended December 31, 2001. Instructions: Prepare journal entries in chronological order for the above events, beginning with the purchase of the machinery on January 4, 1999. Show separately the depreciation for 1999, 2000, and 2001 and 2002
Rifhan products use straight-line
In 2001, after almost 4 years of experience with the equipment, management decided that the estimated life of the equipment should be revised from 10 years to 7 years. No change was made in the estimate of residual value. The revised estimate of useful life was decided on prior to recording to depreciation for the period ended December 31, 2001.
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