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    Depreciation-Change in Estimate

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    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. Depreciation has been entered for 5 years on this basis.
    In 2005, it is determined that the total estimated life (including 2005) should be 10 years
    with a salvage value of $4,500 at the end of that time. Assume straight-line depreciation.
    Instructions
    a. Prepare the entry to correct the prior years' depreciation, if necessary.
    b. Prepare the entry to record depreciation for 2005.

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    Solution Summary

    The solution explains how to calculate the revised depreciation if there is a change in estimate

    $2.19

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