Truck 1 cost $34,000 on January 1, 2013. It should be depreciated on a straight-line basis over an estimated useful life of 10 years with a $12,000 residual value. At December 31, 2015, the accountant discovered that, in error, the ruck was never depreciated. Books are still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year. Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed: General Journal Account/Explanation Page G2 |PR Debit Credit Date Truck 2 cost $36,000 on January 1, 2011. In error, the $36,000 truck cost was expensed in 2011. The truck should be depreciated on a straight-line basis over a estimated useful life of 5 years with a $12,000 residual value. Books are still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year. Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed: General Journal Account/Explanation Page G2 Date PR Debit Credit )Assume that there was a balance of $50,000 in opening retained earnings on January 1, 2015 and that Vision Consulting Inc. follows ASPE, Present the statement of retained earnings for the year ended December 31, 2015. Please make sure your final answer(s) are accurate to 2 decimal places. Vision Consulting Inc. Statement of Retained Earnings For the year ended December 31, 2015 x +| + x + E) REQUIRED DISCLOSURES The statement of retained earnings requires a supplementary disclosure regarding any prior period correction involving income taxes. Report this disclosure below. Please make sure your final answer(s) are accurate to the nearest vhole number. Cumulative error correction, net of $ income tax
Truck 1 cost $34,000 on January 1, 2013. It should be depreciated on a straight-line basis over an estimated useful life of 10 years with a $12,000 residual value. At December 31, 2015, the accountant discovered that, in error, the ruck was never depreciated. Books are still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year. Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed: General Journal Account/Explanation Page G2 |PR Debit Credit Date Truck 2 cost $36,000 on January 1, 2011. In error, the $36,000 truck cost was expensed in 2011. The truck should be depreciated on a straight-line basis over a estimated useful life of 5 years with a $12,000 residual value. Books are still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year. Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed: General Journal Account/Explanation Page G2 Date PR Debit Credit )Assume that there was a balance of $50,000 in opening retained earnings on January 1, 2015 and that Vision Consulting Inc. follows ASPE, Present the statement of retained earnings for the year ended December 31, 2015. Please make sure your final answer(s) are accurate to 2 decimal places. Vision Consulting Inc. Statement of Retained Earnings For the year ended December 31, 2015 x +| + x + E) REQUIRED DISCLOSURES The statement of retained earnings requires a supplementary disclosure regarding any prior period correction involving income taxes. Report this disclosure below. Please make sure your final answer(s) are accurate to the nearest vhole number. Cumulative error correction, net of $ income tax
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:It is December 31, 2015, and Vision Consulting Inc. is preparing adjusting entries at the end of the accounting year. The company owns two different types of trucks. Assume a net income of $70,000 and cash dividends declared and
paid of $10,000 for 2015. The company's corporate tax rate is 10%. The following situations confront the company accountant.
a) For each truck, give the required entry to correct retained earnings for prior years, including any income tax effects - books are closed. Enter an appropriate description when entering the transactions in the journal. Dates must be
entered in the format dd/mmm (ie. January 15 would be 15/Jan).
Please make sure your final answer(s) are accurate to 2 decimal places.
Truck 1 cost $34,000 on January 1, 2013. It should be depreciated on a straight-line basis over an estimated useful life of 10 years with a $12,000 residual value. At December 31, 2015, the accountant discovered that, in error, the
truck was never depreciated. Books are still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year.
Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed:
General Journal
Page G2
PR Debit Credit
Date
Account/Explanation
+ -
Truck 2 cost $36,000 on January 1, 2011. In error, the $36,000 truck cost was expensed in 2011. The truck should be depreciated on a straight-line basis over a estimated useful life of 5 years with a $12,000 residual value. Books are
still open for 2015 therefore the correct current year depreciation expense has already been recorded for 2015 fiscal year.
Entry to correct the prior period error through retained earnings, including income tax effects - prior year books closed:
Page G2
PR Debit Credit
General Journal
Date
Account/Explanation
+ -
b) Assume that there was a balance of $50,000 in opening retained earnings on January 1, 2015 and that Vision Consulting Inc. follows ASPE. Present the statement of retained earnings for the year ended December 31, 2015.
Please make sure your final answer(s) are accurate to 2 decimal places.
Vision Consulting Inc.
Statement of Retained Earnings
For the year ended December 31, 2015
c) REQUIRED DISCLOSURES:
The statement of retained earnings requires a supplementary disclosure regarding any prior period correction involving income taxes. Report this disclosure below. Please make sure your final answer(s) are accurate to the nearest
whole number.
Cumulative error correction, net of $
income tax
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