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    Buckeye Company purchased a machine on January 1, 2004. The machine had a cost of $260,000 with a $10,000 residual value.
    The estimated useful life of the machine was 8 years.
    On January 1, 2006, due to technological innovations, the total estimated useful life was reduced by 2 years from the original life and the residual value was cut to $5,000.
    The company uses straight-line depreciation.

    Prepare the journal entry to record the annual depreciation expense on December 31, 2006. Show detailed computation.

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    Solution Preview

    To get depreciation for 2006, we ned to find the book value.

    2004 Depreciation = (260000 - 10000)/8 = ...

    Solution Summary

    The expert examines accounting changes depreciation.