Exhibit 23-2 On January 1, 2010, Michelle, Inc.purchased a machine for $48, 000.Eight-year, straight-line depreciation with no salvage value was used through December 31, 2013.On January 1, 2014, it was estimated that the total useful life of the machine from acquisition date was ten years.
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Refer to Exhibit 23-2.The adjusting entry that should be made on January 1, 2014, will be in the amount of
A)$4, 000
B)$4, 800
C)$2, 400
D)$ 0

Question

Quizplus · Accepted Answer

The machine was initially being depreciated over 8 years with no salvage value, which means an annual depreciation of $6,000 ($48,000 / 8 years). After 4 years (by the end of 2013), total depreciation would be $24,000. With the revision to a total useful life of 10 years starting from the acquisition date, the remaining book value ($24,000) would be spread over the remaining 6 years, resulting in an annual depreciation of $4,000. There is no need for an adjusting entry on January 1, 2014, specifically to change the depreciation method or amount; the change is in the future depreciation expense calculation.

Exhibit 23-2 on January 1, 2010, Michelle, Inc