Purchase Solution

Change in Estimate

Not what you're looking for?

Ask Custom Question

Assume that Gonzalez Company purchased asset on January 1, 2008, for $80,000. The machine has an estimated useful life of nine years and a residual value o $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January i, 2010, Bloomer discovered that the machine would not be useful beyond December 31, 2013, and estimated its value at the time to be $2,000.

Required:

1. Calculate the depreciation expense, the accumulated depreciation, and the book value of the asset for each year 2008 and 2013.

2. Was the depreciation recorded in 2008 and 2009 wrong? If so, why was it not recorded?

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to calculate the depreciation expense, the accumulated depreciation, and the book value of the asset for each year 2008 and 2013 and answer whether the depreciation recorded in 2008 and 2009 was wrong.

Solution Preview

E8-5 Change in Estimate
Assume that Gonzalez Company purchased an asset on January 1, 2008, for $80,000. The machine has an estimated useful life of nine years and a residual value of $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January 1, 2010, Bloomer discovered that the ...

Purchase this Solution
Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Learning Lean

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Handy Co: Change in estimate, change in entity, correction of errors

    A change in accounting estimate would be changing the estimate of bad debts, change in the estimate of useful life of assets or change in warranty estimates (b) Change in entity - A change in entity means that the financial statements are presented

  • Capitalization Threshold: If you raise it, do you write off?

    They changed their "estimate" for a material asset. GAAP requires that changes in estimates are not retroactive so you do not go back and change past transactions for this change in estimate.

  • Accounting Procedures

    Change in estimate, change in entity, and correction of errors Change in estimate, change in entity, correction of errors Discuss the accounting procedures for and illustrate the following with examples a) Change in estimate There are instance

  • Difference between accounting changes and accounting errors

    Change in accounting estimate-Revision of an estimate because of new information or new experience. 3. Change in reporting entity-Change from reporting as one type of entity to another type of entity. 4.

  • Depreciation - change in estimate

    341287 E11-11 Depreciation - change in estimate for Tom Brady Co: prepare entries E11-11 (Depreciation - Change in Estimate) Machinery purchased for $60,000 by Tom Brady Co.

  • Retrospective or prospective accounting changes

    A change in estimate is only reported in the year of change and going forward. An estimate in the past was just that: an estimate and it was the best guess at the time. 3. P.

  • JAR recorded probable litigation losses: what type of accoun

    What type of accounting change is this and how would it be treated? I am presuming that you mean that $5 million of claims were paid. This is a change in estimate and all changes in estimates are reported "prospectively."

  • Depreciation-Change in Estimate

    (Depreciation-Change in Estimate) 11. (Depreciation-Change in Estimate) Machinery purchased for $60,000 by Joe Montana Co. in 2000 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time.

  • Accounting changes and error corrections

    Question 2 According to the above standards, the change of depreciation method is considered a change in estimate affected by a change in accounting principles.

  • Depreciation and accounting change for Wardell, Clinton Poultry

    Prepare the appropriate adjusting entry for depreciation in 2011 to reflect the revised estimate E11--20 a.

View More Related Solutions