Problem:
Buckeye Company purchased a machine on January 1, 2004. The machine had a cost of $260,000 with a $10,000 residual value.
The estimated useful life of the machine was 8 years.
On January 1, 2006, due to technological innovations, the total estimated useful life was reduced by 2 years from the original life and the residual value was cut to $5,000.
The company uses straight-line depreciation.
Required to do:
Prepare the journal entry to record the annual depreciation expense on December 31, 2006. Show detailed computation.