On January 1, 2014, Suzanne Company purchased equipment for $48,000. The estimated life was five years and the salvage value was estimated at $5,000. On January 1, 2016, it was determined that the equipment's total useful life should have been estimated at seven years and the salvage value should have been estimated at only $4,000. The company used straight-line depreciation.
Required:
a.What type of change did Suzanne Company make on January 1, 2016, and how should Suzanne account for the change?
b.If an adjusting entry is necessary on January 1, 2016, prepare it.
c.Compute the amount of depreciation expense on the equipment for 2016.

Question

On January 1, 2014, Suzanne Company purchased equipment for $48,000. The estimated life was five years and the salvage value was estimated at $5,000. On January 1, 2016, it was determined that the equipment's total useful life should have been estimated at seven years and the salvage value should have been estimated at only $4,000. The company used straight-line depreciation.
Required: 
a.What type of change did Suzanne Company make on January 1, 2016, and how should Suzanne account for the change?
b.If an adjusting entry is necessary on January 1, 2016, prepare it.
c.Compute the amount of depreciation expense on the equipment for 2016.

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Suzanne Company purchased equipment for $48,000. The estimated life was five years and the salvage value was estimated at $5,000. On January 1, 2016, it was determined that the equipment's total useful life should have been estimated at seven years and the salvage value should have been estimated at only $4,000. The company used straight-line depreciation.
Required: 
a.What type of change did Suzanne Company make on January 1, 2016, and how should Suzanne account for the change?
b.If an adjusting entry is necessary on January 1, 2016, prepare it.
c.Compute the amount of depreciation expense on the equipment for 2016.

On January 1, 2014, Suzanne Company Purchased Equipment for $48,000