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Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of...

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Accounting

Collins Corporation purchased office equipment at the beginning of 2022 and capitalized a cost of $1,938,000. This cost figure included the following expenditures:

Purchase price $ 1,790,000
Freight charges 24,000
Installation charges 14,000
Annual maintenance charge 110,000
Total $ 1,938,000

The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2022 and 2023.

In 2024, after the 2023 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the companys controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment.

Required:

  1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024.
  2. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods.
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In my previous answers, the green check indicates that the answer is correct and the red x indicates that it is incorrect.

Complete this question by entering your answers in the tabs below. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Complete this question by entering your answers in the tabs below. Ignoring income taxes, prepare any 2024 journal entry(s) related to the change in depreciation methods. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field
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