Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Transcribed Image Text:Bridgeport 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.
3.
(a)
Straight-line
Declining-balance 48,000
Bridgeport purchased equipment on January 2, 2017, for $79,400. 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 $2,900
salvage value.
1.
During 2020, Bridgeport changed from the double-declining-balance method for its building to the straight-line method. The
building originally cost $300,000. It had a useful life of 10 years and a salvage value of $30,000. The following computations
present depreciation on both bases for 2018 and 2019.
2.
2019
3.
Prepare the journal entries to record depreciation expense for 2020 and correct any errors made to date related to the
information provided. (Ignore taxes.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.
If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
$27,000 $27,000
60,000
No. Account Titles and Explanation
Bridgeport purchased a machine on July 1, 2018, at a cost of $120,000. The machine has a salvage value of $18,000 and a
useful life of 8 years. Bridgeport's bookkeeper recorded straight-line depreciation in 2018 and 2019 but failed to consider
the salvage value.
2018
Depreciation Expense
Accumulated Depreciation-Equipment
Accumulated Depreciation-Buildings
Depreciation Expense
Depreciation Expense
Accumulated Depreciation-Machinery
(To record current year depreciation.)
(To correct prior year depreciation.)
Debit
Credit
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