A Company Acquired a Machine for Use in a Business

question 77

Essay

A company acquired a machine for use in a business at the beginning of year 1: Cost, $110,000; Estimated life, 10 years; no residual value (straight-line depreciation).
Required:
Two separate and independent cases, involving accounting changes with respect to the machine are given below. For each case, respond to the following questions:
(1) What type of change is involved, if any?
(2) Give the entry to reflect the change. If none is required, give the reason. Ignore any tax effect.
(3) Give the entry for depreciation in year 5.
CASE A At the end of the 5^th year, it was discovered that no depreciation had ever been recorded:
(1) Type of change: ____________________________________________.
(2) Correcting entry:
(3) Adjusting entry, depreciation:
CASE B Assume depreciation has been recorded in the usual manner during the first four years. At the end of the 5^th year, the estimated total life was changed from 10 to 15 years.
(1) Type of change: ____________________________________________.
(2) Correcting entry:
(3) Adjusting entry, depreciation:

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Definitions:

Hematocrit

A measure of the volume percentage of red blood cells in blood, used to detect anemia, dehydration, and other conditions.

Erythrocytes

Red blood cells that carry oxygen from the lungs to the body tissues and carbon dioxide back to the lungs.

Anemic Cells

Anemic cells refer to blood cells, typically red blood cells, that are deficient in hemoglobin, leading to reduced oxygen transport and symptoms of anemia.

Antibodies

Proteins produced by the immune system in response to foreign substances, which they neutralize or mark for destruction.