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Question: 1268...

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Petty Corporation has been depreciating equipment over a 10-year life on which costs $24,000, was purchased on January 1, 2016. The equi $6,000. On the basis of experience since acquisition, management has decided to a total life of 14 years instead of 10, with no change in the estimated residual al tive on January 1, 2020. The annual financial statements are prepared on a c presented). 2019 income and 2020 income before depreciation for 2019 and 2020 wer respectively. Disregard income tax considerations. Required a. Prepare the journal entries to be recorded in 2016-2019 for annual depreciation. Determine the Recording and Reporting a Change in Estimated Useful Life LO4 a Change equipment has an estimated residu value. The change is to be effec. basis (2019 and 4, 000 ance in accumulated depreciation on December 31, 2019 b. Prepare the entry to record depreciation expense in 2020, the year of the change. c. Illustrate how the change should be reported on the 2020 balance sheet and income statement,which companied by the 2019 results for comparative purposes (shares of common stock outstanding are 100 Southern Corporation has been depreciating equipment over a 10-year life using the sum-of-the-years di method. The equipment was acquired January 1,2016, and cost $68,000 (estimated residual value, $13,0 Exercise 12-68 a Change 0), The company decided to change to straight-line depreciation, effective at the beginning of 2020, with no Method LO5 estimated useful life or the residual value. The annual accounting period ends December 31 Required a. Compute accumulated depreciation on December 31,2019, before the change in depreciation method b. Prepare the journal entry for depreciation expense in 2020 Texas Inc. has made several accounting changes to improve its expense allocation method. Assume that it is Exercise 12-69 Recording a Change in Depreciation Method and Change in Useful Life LO4, 5 end of 2020 and that the accounting period ends on December 31. The books have not been adjusted or closed a the end of 2020. Among the changes are the following. I. Equipment A that costs $50,000 (estimated useful life 10 years, residual value $6,000) has been depreci ated using the sum-of-the-years-digits method. Early in the eighth year (2020), it was decided to change to straight-line depreciation (with no change in residual value or estimated life) Equipment B that cost $17,000 (with no residual value) is being depreciated over its estimated useful li of 20 years using the straight-line method. Early in the sixth year (2020), it was decided that the useful lfie would not last longer than 13 years from the date of acquisition 2.
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