ADM 1340 Study Guide - John Wiley & Sons, George Trenholm, Book Value

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Breid Mc Ilkenny

Document Summary

If the company accepts lindy"s proposed changes in useful life and residual value, the 2012 depreciation expense for machine 1 will be lower and the depreciation expense for machine 2 will be higher than for 2011. The depreciation expense for machine 1 will be lower due to the estimated longer useful life and higher residual value. The depreciation expense for machine 2 will be higher due to the shorter estimated useful life and lower residual value. The sale of equipment would be calculated as follows: The gain can also be derived from the disposal entry: The accumulated depreciation account was credited by two amounts. The one for related to depreciation expense so the other credit must relate to an impairment loss. Therefore the entry to record this would be: ,125 each year (2) double diminishing-balance (ddb) method. Year 2: (,000 ,500) 50% = ,500 50% = ,250. Year 3: (,000 ,500 ,250) 50% = ,250 50% = .