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.
To get depreciation for 2006, we ned to find the book value.
2004 Depreciation = (260000 - 10000)/8 = ...
The expert examines accounting changes depreciation.