9th Edition

ISBN: 9781260681956

Author: SPICELAND

Publisher: MCG

Concept explainers

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 exp…

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…

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Textbook Question

Chapter 20, Problem 20.11E

Change in depreciation methods

• LO20–3

The Canliss Milling Company purchased machinery on January 2, 2016, 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 2016 and 2017. Early in 2018, the company changed its depreciation method to the sum-of-the-years’-digits (SYD) method.

Required:

1. Briefly describe the way Canliss should report this accounting change in the 2017–2018 comparative financial statements.

2. Prepare any 2018 journal entry related to the change.

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Chapter 20, Problem 20.10E

Chapter 20, Problem 20.12E

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Chapter 20 Solutions

INTERMEDIATE ACCOUNTING, W/CONNECT

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Solution Summary: The author explains the change in depreciation methods in the 2017-2018 comparative financial statements. C Corporation does not change its previous financial statement and has not revised.

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