Blue Inc. acquired some manufacturing equipment in January 2018 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2021, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2024. As a result, Blue will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2021, Blue should: A. Charge $280,000 in depreciation expense. B. Report the book value of the equipment in its December 31,2021 balance sheet at $210,000. C. Make an adjustment to retained earnings for the error in measuring depreciation during 2018-2020. D. None of these answer choices are correct. O A O B O D

Blue Inc. acquired some manufacturing equipment in January 2018 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis. During 2021, the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2024. As a result, Blue will plan to replace the equipment at that time, effectively reducing the asset's life from ten to seven years. In its financial statements for 2021, Blue should: A. Charge $280,000 in depreciation expense. B. Report the book value of the equipment in its December 31,2021 balance sheet at $210,000. C. Make an adjustment to retained earnings for the error in measuring depreciation during 2018-2020. D. None of these answer choices are correct. O A O B O D

Name: Blue Inc. acquired some manufacturing equipment in January 2018 for $
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Description: Blue Inc. acquired some manufacturing equipment in January 2018 for $400,000 and depreciated it $40,000 each year for threeyears on a straight-line basis. During 2021, the manufacturer announced a new technology for this type of equipment that willm

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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