On January 1, 2022, ABC Company purchased equipment for $50,000 with an estimated useful life...
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On January 1, 2022, ABC Company purchased equipment for $50,000 with an estimated useful life of 5 years and a salvage value of $5,000. The company uses straight-line depreciation. On December 31, 2022, the company discovered that the estimated useful life of the equipment should have been 8 years instead of 5 years. a) Calculate the annual depreciation expense for the equipment using the original estimated useful life and salvage value. b) Calculate the carrying value of the equipment on December 31, 2022 using the original estimated useful life and salvage value. c) Calculate the annual depreciation expense for the equipment using the corrected estimated useful life and salvage value. d) Calculate the carrying value of the equipment on December 31, 2022 using the corrected estimated useful life and salvage value. e) Journalize the adjusting entry required on December 31, 2022, to record the correction of the estimated useful life. Assume a December 31 year-end for ABC Company.
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