Q1 On January 1/7/2019 Dhofar Corporation Purchase Building at a cost of OR 99000. Dhofar adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, without residual value. At the beginning of 2021, the company decided to change the depreciation method to Sum of Years Digits Method. The retained earning balance as follow: Retained earnings on 1/1/2019 RO 20000, on 1/1/2020 OR 28000 and 60000 on 1/1/2021.Follow the income statement for 2020 and 2021. Income statement 2019 2020 Sales 340000 440000 COGS 180000 200000 Gross Profit 160000 240000 Administrative expenses 48000 80000 Depreciation (?) Net profit before tax ? Tax 20% (?) Net profit after tax ? Required: Statement the effect of change in accounting policy on the financial statements on 12/31/2011, along with preparing the necessary accounting entry to prove the effect of the change in accounting policy and re-preparing the lists for previous periods.
Q1 On January 1/7/2019 Dhofar Corporation Purchase Building at a cost of OR 99000. Dhofar adopted the straight-line method of
The retained earning balance as follow:
Income statement
|
|
2019 |
2020 |
|
Sales |
340000 |
440000 |
|
COGS |
180000 |
200000 |
|
Gross Profit |
160000 |
240000 |
|
Administrative expenses |
48000 |
80000 |
|
Depreciation |
(?) |
|
|
Net profit before tax |
? |
|
|
Tax 20% |
(?) |
|
|
Net profit after tax |
? |
|
Required:
Statement the effect of change in accounting policy on the financial statements on 12/31/2011, along with preparing the necessary accounting entry to prove the effect of the change in accounting policy and re-preparing the lists for previous periods.
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