Gear Company records $2,000 of depreciation under the sum-of-years-digits method in Year 9, the company's first year of operations. In Year 10, the company decides to change to the straight-line method for accounting purposes. If the straight-line method were used in Year 9, depreciation would have been $1,500. Depreciation in Year 10 under the straight-line method is $1,800 (depreciated based on the book value on January 1 of Year 10). The tax rate is 25%. Income from continuing operations before tax and before deducting depreciation in Year 10 is $12,000. Provide the Year 10 entry to record this change and calculate Year 10 net income.
Gear Company records $2,000 of depreciation under the sum-of-years-digits method in Year 9, the company's first year of operations. In Year 10, the company decides to change to the straight-line method for accounting purposes. If the straight-line method were used in Year 9, depreciation would have been $1,500. Depreciation in Year 10 under the straight-line method is $1,800 (depreciated based on the book value on January 1 of Year 10). The tax rate is 25%. Income from continuing operations before tax and before deducting depreciation in Year 10 is $12,000. Provide the Year 10 entry to record this change and calculate Year 10 net income.
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 2BCRQ
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![Gear Company records $2,000 of depreciation under the sum-of-years'-digits method
in Year 9, the company's first year of operations. In Year 10, the company decides to
change to the straight-line method for accounting purposes. If the straight-line
method were used in Year 9, depreciation would have been $1,500. Depreciation in
Year 10 under the straight-line method is $1,800 (depreciated based on the book
value on January 1 of Year 10). The tax rate is 25%. Income from continuing
operations before tax and before deducting depreciation in Year 10 is $12,000.
Provide the Year 10 entry to record this change and calculate Year 10 net income.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb917b1a8-e111-4801-9c3f-bfdd02817a4f%2F6d2b257e-c514-47f9-86e8-004807bd58fc%2Ffq09vjk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Gear Company records $2,000 of depreciation under the sum-of-years'-digits method
in Year 9, the company's first year of operations. In Year 10, the company decides to
change to the straight-line method for accounting purposes. If the straight-line
method were used in Year 9, depreciation would have been $1,500. Depreciation in
Year 10 under the straight-line method is $1,800 (depreciated based on the book
value on January 1 of Year 10). The tax rate is 25%. Income from continuing
operations before tax and before deducting depreciation in Year 10 is $12,000.
Provide the Year 10 entry to record this change and calculate Year 10 net income.
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