Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,938,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,790,000 24,000 14,000 110,000 $ 1,938,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Transaction No 1 General Journal Depreciation expense Accumulated depreciation Debit Credit × 171,375 x 189,708 x
Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,938,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,790,000 24,000 14,000 110,000 $ 1,938,000 The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023. In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment. Required: 1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. 2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Transaction No 1 General Journal Depreciation expense Accumulated depreciation Debit Credit × 171,375 x 189,708 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,938,000. This cost figure
included the following expenditures:
Purchase price
Freight charges
Installation charges
Annual maintenance charge
Total
$ 1,790,000
24,000
14,000
110,000
$ 1,938,000
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance
method was used to determine depreciation expense for 2022 and 2023.
In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for
this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year
of annual maintenance charges for the equipment.
Required:
1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024.
2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transaction
No
1
General Journal
Depreciation expense
Accumulated depreciation
Debit
Credit
×
171,375 x
189,708 x
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