FAL Corporation purchased a robot to be used in manufacturing. The purchase was made at the beginning of 20X1 by paying cash of $500,000. The robot has an estimated residual value of $20,000 and an expected useful life of ten years. At the beginning of 20X3, FAL concluded that the total useful life of the robot will be eight years rather than ten, and that the residual value will be zero. FAL uses the straight-line method for depreciation. Required:
1. Make the journal entry to record depreciation on the robot for 20X2.
2. Make the journal entry to record depreciation on the robot for 20X3, including the effect of the changes in estimates.
3. Describe how a business should account for a change in the estimated useful life and/or residual value of a depreciable asset.

Question

FAL Corporation purchased a robot to be used in manufacturing. The purchase was made at the beginning of 20X1 by paying cash of $500,000. The robot has an estimated residual value of $20,000 and an expected useful life of ten years. At the beginning of 20X3, FAL concluded that the total useful life of the robot will be eight years rather than ten, and that the residual value will be zero. FAL uses the straight-line method for depreciation. Required: 
1. Make the journal entry to record depreciation on the robot for 20X2. 
2. Make the journal entry to record depreciation on the robot for 20X3, including the effect of the changes in estimates. 
3. Describe how a business should account for a change in the estimated useful life and/or residual value of a depreciable asset.

Quizplus · Accepted Answer

The Answer of FAL Corporation purchased a robot to be used in manufacturing. The purchase was made at the beginning of 20X1 by paying cash of $500,000. The robot has an estimated residual value of $20,000 and an expected useful life of ten years. At the beginning of 20X3, FAL concluded that the total useful life of the robot will be eight years rather than ten, and that the residual value will be zero. FAL uses the straight-line method for depreciation. Required: 
1. Make the journal entry to record depreciation on the robot for 20X2. 
2. Make the journal entry to record depreciation on the robot for 20X3, including the effect of the changes in estimates. 
3. Describe how a business should account for a change in the estimated useful life and/or residual value of a depreciable asset.

FAL Corporation Purchased a Robot to Be Used in Manufacturing