On January 1, 2019, Nobel Corporation acquired machinery at a cost of P600,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the double-declining balance method of depreciation for this machine. Assuming a 30% tax rate, the cumulative effect of this accounting change on beginning retained earnings, is (A) P112,800.

On January 1, 2019, Nobel Corporation acquired machinery at a cost of P600,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the double-declining balance method of depreciation for this machine. Assuming a 30% tax rate, the cumulative effect of this accounting change on beginning retained earnings, is (A) P112,800.

Name: On January 1, 2019, Nobel Corporation acquired machinery at a cost of
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: On January 1, 2019, Nobel Corporation acquired machinery at a cost of P600,000. Nobel adopted the straight-line methodof depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residualvalue. At

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,832,000. Its useful life was estimated to be six years with a $228,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year ($ in thousands) Straight-Line Declining Balance Difference 2021 $ 434 $ 944 $ 510 2022 434 629 195 2023 434 420 (14) $ 1,302 $ 1,993 $ 691 Required: 2. Prepare any 2024 journal entry related to the change. Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
The Canliss Milling Company purchased machinery on January 2, 2019, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2019 and 2020. Early in 2021, the company changed its depreciation method to the sum-of-the-years’-digits (SYD) method. Required:2. Prepare any 2021 journal entry related to the change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the adjusting entry for depreciation in 2021.
SABM Co. acquired a machine on January 1, 2018, at a cost of P120,000. It was expected to have a useful economic life of 10 years. SABM Co. uses the straight-line method in depreciating its machinery and equipment and reports on a calendar year basis. On December 31, 2020, the machine was appraised as having a gross replacement cost of P150,000. SABM Co. applies the revaluation model in valuing this class of property, plant, and equipment after its initial recognition. What is the balance of the revaluation surplus account on December 31, 2021 assuming that piecemeal realization of revaluation surplus is in order? * P30,000 P21,000 P18,000 P15,000 answer not given
On January 1, 2019, Ivanhoe Corporation acquired equipment at a cost of $858000. Ivanhoe adopted the sum-of-the-years’-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of 8 years, with no residual value. At the beginning of 2022, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2022 would be $171600. $107250. $44688. $71500.
Gwynedd Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation expense at the end of each calendar year. On January 1, 2020, the company purchased a machine costing $170,000, and it has an estimated useful life of 15 years and an estimated residual value of $26,000. Depreciation for partial years is rounded to the nearest full month. In 2024, management decided to revise its estimated life from 18 years to 25 years. No change was made in the estimated residual value. The revised estimate of the useful life was decided prior to recording annual depreciation expense for the year ended December 31, 2024. Instructions: a) Prepare journal entries in chronological order for the given events, beginning with the purchase of machinery on January 1, 2020. Record depreciation expense separately for each year 2020 through 2024 (5 separate entries for each year's depreciation) (Hint: record the purchase and annual depreciation for each…
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was $30 million and its tax basis was $20 million. At December 31, 2021, the book value of the equipment was $28 million and its tax basis was $12 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $50 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 25%. 2. What is Ameen's 2021 net income?
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,816,000. Its useful life was estimated to be six years with a $224,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: ($ in thousands) Year Straight-Line Declining Balance Difference 2018 $ 432 $ 938 $ 506 2019 432 626 194 2020 432 417 (15 ) $ 1,296 $ 1,981 $ 685 Required:2. Prepare any 2021 journal entry related to the change. (Enter your answers in dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 2017, Loko Corporation acquired equipment at a cost of ₱1,800,000. Loko adopted the sum-of-the-years’ digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2020 would be P150,000 P360,000 P93,750 P225,000
Discuss the possible factor that affect tax compliance in Ghana
Popeye Company purchased a machine for $350,000 on January 1, 2020. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2020. Popeye discovered the error in 2021. What amount should Popeye record as depreciation expense for 2021? The tax rate is 25%. O O O O $105,000. $52,500. $70,000. $140,000.
Oriole Company purchased equipment that cost $2595000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $103800 residual value. Oriole uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Oriole is subject to a 30% tax rate. Oriole’s net income for the year ended December 31, 2020, was understated by $2595000. $2318200. $1816500. $1622740.
On march 10, 2023, Sweet Acacia limited sold equipment that it bought for 286800 on August 20, 2026. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of 24000 at the end of that time and depreciation has been calculated on that basis. The company uses the straight line method of depreciation and prepares its financial statement under IFRS. Calculate the depreciation charges on this equipment for 2016 and 2023, and the total charge for the period from 2017 to 2022, inclusive under each of the following six assumptions for partial periods. Depreciation is calculated for the exact period of time during which the asset is owned. Depreciation is calculated for the full year on January 1 balance in the asset account. Depreciation is calculated for the full year on December 31 balance in the asset account Depreciation for a half year is charged on plant assets that are acquired or disposed of during the year. Depreciation is…