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problem 8-7(AICPA Adapted)
January 1, 20
75.980, 000 and ae Flax Company purchased a machine for
ated useful preciated it by the straight line method using an
estimated usetu life of eight years with no residual value-
ont pers By ie 1, the entity determined that the machine had
au six years from the date of ‘acquisition and the resid
value was P480,000.
An accounting change was made in 2021 to reflect this additional
information.
What amount should be reported as accumulated depreciation for
the machine on December 31, 2021?
a. 2,920,000
b. 3,080,000
c. 3,200,000
d. 3,520,000
Solution 8-7 Answer a
Acquisition cost — January |, 2018 5,280,000
Accumulated depreciation for 2018, 2019 and 2020
1,980,000
(5,280,000 /8x3)
January 1, 2021 3,300,000
Carrying amount —
Accumulated depreciation - January |, 2021 1,980,000
Depreciation for 2021 (2,820,000 73 years) 940,000
Accumulated depreciation - December 31, 2021 2,920, 000
ee
Carrying amount — January |, 2021 3,300,000
z (480,000)
Residual value
Depreciable am 2,820,000
=—_
ount — January 1, 2021
Revised life 6 years
Years expired 3
3 years
Remaining revised life
107
