Straight-line Depreciation : Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the residual value is shown as below: Depreciation = ( Cost of the asset − Residual value ) Estimated useful life of the asset Sum-of- the-years’ digits method: Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction. To discuss: The types of accounting changes in the method of depreciation, and explain the circumstances of accounting changes occur.

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 11.8BYP

Requirement – 1

To determine

Straight-line Depreciation:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the residual value is shown as below:

Depreciation = (Cost of the asset−Residual value)Estimated useful life of the asset

Sum-of- the-years’ digits method:

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

To discuss: The types of accounting changes in the method of depreciation, and explain the circumstances of accounting changes occur.

Requirement – 2

To determine

To discuss: The types of accounting changes in the expected service life.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Please give me answer general accounting question

respond to ceasar Companies make adjusting entries to ensure that their financial statements accurately reflect the true financial position and performance during a specific accounting period. These entries are necessary to account for revenues earned and expenses incurred that may not yet have been recorded in the books. Adjusting entries are typically made at the end of an accounting period, during the preparation of financial statements, as part of the accounting cycle. This step is crucial in aligning the company’s books with the accrual basis of accounting, where revenues and expenses are recognized when they are earned or incurred, rather than when cash is received or paid. By making these adjustments, companies can provide accurate and reliable financial information to stakeholders.

According to the accrual method of accounting, businesses make adjusting entries to ensure that their financial statements are correctly depicting their financial situation and performance. No matter when cash transactions take place, adjusting entries are required to record revenues when they are generated and expenses when they are incurred (Weygandt et al., 2022). In order to guarantee that financial statements present an accurate and impartial picture of their company's financial health, these entries help in bringing financial records into compliance with the revenue recognition and matching standards. In order to account for things like accumulated revenues, accrued expenses, depreciation, and prepaid expenses, adjusting entries are usually made at the conclusion of an accounting period prior to the preparation of financial statements (Kieso et al., 2020). By implementing these changes, businesses avoid making false representations in their financial reports, which enables…