Quayle Company acquired machinery on January 1, 2005 which it depreciated under thestraight-line method with an estimated life of fifteen years and no salvage value. On January1, 2010, Quayle estimated that the remaining useful life of this machinery was six years withno salvage value. How should this change be accounted for by Quayle?As a prior period adjustmentO As the cumulative effect of a change in accounting principle in 2010.O By setting future annual depreciation equal to one-sixth of the book value on January 1, 2010O By continuing to depreciate the machinery over the original fifteen year life.

Quayle Company acquired machinery on January 1, 2005 and depreciated it under the straight-line…

Answered: Quayle Company acquired machinery on…

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

Munabhai
The Canliss Milling Company purchased machinery on January 2, 2022, for $930,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $186,000 in depreciation in 2022 and 2023. Early in 2024, the company changed its depreciation method to the sum-of-the-years'-digits (SYD) method. Required: Will Canliss apply the SYD method retrospectively or apply the method prospectively? Prepare any 2024 journal entry related to the change.
Cullumber Company purchased a machine on January 1, 2019, for $1008000. At the date of acquisition, the machine had an estimated useful life of 6 years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2022, Cullumber determined, as a result of additional information, that the machine had an estimated useful life of 8 years from the date of acquisition with no salvage. An accounting change was made in 2022 to reflect this additional information. Assume that the direct effects of this change are limited to the effect on depreciation and the related tax provision, and that the income tax rate was 30% in 2019, 2020, 2021, and 2022. What should be reported in Cullumber's income statement for the year ended December 31, 2022, as the cumulative effect on prior years of changing the estimated useful life of the machine? $0 $100800 $67200 $504000
On January 1, 2021, Mama Company purchased a machine for P2,750,000. The machine was depreciated using the sum of years' digits method based on a useful life of 10 years with no residual value. On January 1, 2022, the entity changed to the straight line method of depreciation. The entity can justify the change. What is the depreciation for the machine on December 31, 2022? (A) 200,000 (B) 250,000 500,000 D) 750,000
Vikrambhai
On January 1, 2019, Ivanhoe Corporation acquired machinery at a cost of $1200000. Ivanhoe adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2022 would be $61440. $87771. $120000. $171429.
SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service life, 5 years; salvage value, $16,200 $503,700 Building, estimated service life, 30 years; no salvage value $648,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2018, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the journal entry to record depreciation expense for the equipment in 2018. (b) Prepare the journal entry to record depreciation expense for the building in 2018.
On January 1, 2019, Uptown Builders purchased a machine for $200,000. Uptown's policy is to depreciate this type of machinery using straight-line depreciation, over five years, with no residual value. Because of a bookkeeping error, no depreciation was recognized in Uptown's 2019 or 2020 financial statements. The error was discovered during the preparation of the 2021 financial statements. Ignoring income taxes, the impact of this error on retained earnings prior to any 2021 adjustments is: Question 8 options: Overstatement of $80,000 Understatement of $120,000 Understatement of $80,000 Overstatement of $120,000
Domestic
Oriole Company purchased a machine on January 1, 2019, for $927000. At the date of acquisition, the machine had an estimated useful life of 6 years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2022, Oriole determined, as a result of additional information, that the machine had an estimated useful life of 8 years from the date of acquisition with no salvage. An accounting change was made in 2022 to reflect this additional information.Assume that the direct effects of this change are limited to the effect on depreciation and the related tax provision, and that the income tax rate was 40% in 2019, 2020, 2021, and 2022. What should be reported in Oriole's income statement for the year ended December 31, 2022, as the cumulative effect on prior years of changing the estimated useful life of the machine? $463500 $61800 $0 $92700
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2015 for $2,560,000. Its useful life was estimated to be six years with a $160,000 residual value. At the beginning of 2018, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows ($ in 000s): Year 2015 Straight-Line $ 400 2016 2017 400 400 $1,200 Declining Balance $ 853 569 Difference $453 169 379 $1,801 (21) $601 Required: 2. Prepare any 2018 journal entry related to the change. (Enter your answers in dollars rounded to the nearest thousand. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the adjusting entry for depreciation in 2018. Note: Enter debits before credits. Event 1 General Journal Debit Credit
sa

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS