Problem: Assume that Gonzalez Company purchased asset on January 1, 2008, for $80,000. The machine has an estimated useful life of nine years and a residual value o $8,000. Bloomer has chosen to use the straight-line method of depreciation. On January i, 2010, Bloomer discovered that the machine would not be useful beyond December 31, 2013, and estimated its value at the time to be $2,000.
Required to do:
Question 1. Calculate the depreciation expense, the accumulated depreciation, and the book value of the asset for each year 2008 and 2013.
Question 2. Was the depreciation recorded in 2008 and 2009 wrong? If so, why was it not recorded?