Question

In: Accounting

Echo Company purchased a machine some years ago. At the end of the current year, the...

Echo Company purchased a machine some years ago. At the end of the current year, the company revalued the machine to its fair value. The machine has the following characteristics as at the end of the current year:

Original cost

$1,000,000

Residual value

$   200,000

Estimated useful life (from acquisition date)

10 years

Years of use up to end of current year

4 years

Estimated useful life remaining (after current year-end)

6 years

Fair value at end of current year

$   800,000

Depreciation method

Straight-line

Required:

  1. Calculate the depreciation expense for the years prior to the revaluation.
  2. Calculate the depreciation expense for the years following the revaluation.
  3. Record the journal entry for the revaluation adjustment using the elimination method.
  4. Record the journal entry for the revaluation adjustment using the proportional method.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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