i have this question i did it but i dont know if i am right or wrong can somebody help me thank you

beta co. bought a truck on jan 1, 2004 for 175,000. it had a 15,000 estimated residual value, a ten yr useful life, and beta uses staright line amortization.

a) at the bgn of 2008 the company realized the asset would have a total useful life of 8 yrs and a residual value of 11,000.

i) prepare journal entry:
my ans: 175000-15,000/10 = 16,000
160,000 * 4/10 = 64,000

amortization expense 64,000
accumulated amort 64,000

ii) calc amrotization for 2008
- 175,000-80000=95,000-11,000= 84,000

b) an expense acct was debited on the purchase date , this ws discovered in 2006

accts payable 175,000
equip 175,000

ii) calc amort for 2006
175,000 * 2/10 = 35,000

this is what i got for my answers but i dont know if am rite.

omsailogistic

hi arvind....
this is neeraj

YOU DID MISTAKE HERE

ii) calc amrotization for 2008
- 175,000-80000=95,000-11,000= 84,000

IT SHOULD BE

175000 - 64000 = 111000 -11000 = 100000

Reasons : Depreciation is provided at the end of year....
when we came to know that the realizable value has changed we have to make
appropriate adjustments first before making amortizations. This principle applies
to all assets tangibles as well as intangibles.

The Depreciation now onwards shall be 100000/8 = 12500

I think you should try journal entries yourself as this is just amortizations. No adjustment entries for above is required.

ADJUSTMENT ENTRY IS REQUIRED FOR (b)

ENTRY passed
EXPENSE A/C................DR
TO PARTY A/C

ADJUSTMENT ENTRY.....since expenses wrongly debited now credited.

EQUIPMENT A/C.............DR
TO EXPENSE A/C

Amortization calculation was right....if there is no scrap value and SLM is followed.

Hope you get your answer.... :-)