In 2016, internal auditors discovered that PKE Displays, Inc.,had debited an expense account for the $252,000 cost of a machinepurchased on January 1, 2013. The machineâs useful life wasexpected to be four years with no residual value. Straight-linedepreciation is used by PKE.
Ignoring income taxes, prepare the journal entry PKE will use tocorrect the error. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)
In 2016, internal auditors discovered that PKE Displays, Inc.,had debited an expense account for the $252,000 cost of a machinepurchased on January 1, 2013. The machineâs useful life wasexpected to be four years with no residual value. Straight-linedepreciation is used by PKE. |
Ignoring income taxes, prepare the journal entry PKE will use tocorrect the error. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.) |
Related questions
6. On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.7 million, patent; $4.7 million, developed technology; $3.7 million, in-process research and development; $6.7 million, goodwill. Lexiconâs policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life.
What is the total amount of expenses (ignoring taxes) that would appear in Lexiconâs income statement for the year ended December 31 related to these items? (Enter your answers in whole dollars.)
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7. On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $56,625. The expenditures made to acquire the asset were as follows:
| Purchase price | $ | 242,000 | |
| Freight charges | 8,400 | ||
| Installation charges | 12,000 | ||
Jacksonâs policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipmentâs life and then switch to straight line halfway through the equipmentâs life.
Required:
1. Calculate depreciation for each year of the assetâs eight-year life.
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8. In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $369,000 cost of equipment purchased on January 1, 2015. The equipmentâs life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.
Required:
1. Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.)
2. Assume the error was discovered in 2020 after the 2019 financial statements are issued. Prepare the correcting entry.
Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Irwin, Inc., constructed a machine at a total cost of $35million. Construction was completed at the end of 2012 and themachine was placed in service at the beginning of 2013. The machinewas being depreciated over a 10-year life using thesum-of-the-yearsâ-digits method. The residual value is expected tobe $2 million. At the beginning of 2016, Irwin decided to change tothe straight-line method. |
Ignoring income taxes, prepare the journal entry relating to themachine for 2016. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in millions rounded to 1 decimalplace (i.e., 5,500,000 should be entered as 5.5).) |
