During 2022 and 2023, Faulkner Manufacturing used the sum-of-the-years' - digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2024, Faulkner decided to change to the straight-line method for both financial reporting and tax purposes. A tax rate of 25% is in effect for all years. For an asset that cost $30,000 with an estimated residual value of $1,000 and an estimated useful life of 10 years, the depreciation under different methods is as follows: Year Straight Line SYD Difference 2022 $2,900 $ 5,273 $ 2,373 2023 2,900 4,745 1,845 $ 5,800 $ 10,018 $ 4,218 Required: Prepare the journal entry that Faulkner will record in 2024 related to the change.

During 2022 and 2023, Faulkner Manufacturing used the sum-of-the-years' - digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2024, Faulkner decided to change to the straight-line method for both financial reporting and tax purposes. A tax rate of 25% is in effect for all years. For an asset that cost $30,000 with an estimated residual value of $1,000 and an estimated useful life of 10 years, the depreciation under different methods is as follows: Year Straight Line SYD Difference 2022 $2,900 $ 5,273 $ 2,373 2023 2,900 4,745 1,845 $ 5,800 $ 10,018 $ 4,218 Required: Prepare the journal entry that Faulkner will record in 2024 related to the change.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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