Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $1,940,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,800,000 25,000 15,000 100,000 $ 1,940,000 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 2019 and 2020. In 2021, after the 2020 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 2021. 2. Ignoring income taxes, prepare any 2021 journal entry(s) related to the change in depreciation methods.

Collins Corporation purchased office equipment at the beginning of 2019 and capitalized a cost of $1,940,000. This cost figure included the following expenditures: Purchase price Freight charges Installation charges Annual maintenance charge Total $ 1,800,000 25,000 15,000 100,000 $ 1,940,000 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 2019 and 2020. In 2021, after the 2020 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 2021. 2. Ignoring income taxes, prepare any 2021 journal entry(s) related to the change in depreciation methods.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...

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Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,936,000. This cost figure included the following expenditures: Purchase price $ 1,780,000 Freight charges 23,000 Installation charges 13,000 Annual maintenance charge 120,000 Total $ 1,936,000 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: Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. Ignoring income taxes, prepare any 2024…
(b) Prepare the journal entry (if any) to record depreciation expense for 2021. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts
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