18). During prior periods, the Rocket Company used the double-declining balance method for depreciating its equipment, but in 2010 it decided to switch to the straight-line method. The equipment was purchased in 2008 for $1,000,000 and had a 10-year life. The balance in the accumulated depreciation account for equipment at the beginning of 2010 was $360,000. How will 2010's net income be changed by switching to the new depreciation if Rocket has an effective tax rate of 40 percent. O $ 60,000 smaller O $16,800 larger O $28,000 larger O $40,000 smaller

18). During prior periods, the Rocket Company used the double-declining balance method for depreciating its equipment, but in 2010 it decided to switch to the straight-line method. The equipment was purchased in 2008 for $1,000,000 and had a 10-year life. The balance in the accumulated depreciation account for equipment at the beginning of 2010 was $360,000. How will 2010's net income be changed by switching to the new depreciation if Rocket has an effective tax rate of 40 percent. O $ 60,000 smaller O $16,800 larger O $28,000 larger O $40,000 smaller

Name: 18) . During prior periods, the Rocket Company used the double-declin
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: 18) . During prior periods, the Rocket Company used the double-declining balance methodfordepreciating its equipment, but in 2010 it decided to switch to the straight-linemethod.The equipment was purchased in 2008 for $1,000,000 and had a 10-year li

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

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 thousands)Year Straight Line Declining Balance Difference2015 $ 400 $ 853 $4532016 400 569 1692017 400 379 (21)$1,200 $1,801 $601Required:1. Briefly describe the way Clinton should report this accounting change in the 2016–2018 comparative financial statements.2. Prepare any 2018 journal entry related to the change.
And lastly, can I get a step by step explanation of this one too? 7. On January 1, 2018, XYZ Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method. A. What was the depreciation expense for XYZ for the year ended December 31, 2018? Also calculate the 12/31/18 balance of the accumulated depreciation account. B. What was the depreciation expense for XYZ for the year ended December 31, 2019? Also calculate the 12/31/19 balance of the accumulated depreciation account.
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,880,000. Its useful life was estimated to be four years, with a $168,000 residual value. At the beginning of 2024, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: ($ in thousands) Year Straight Line Declining Balance Difference 2021 $ 678 $ 1,440 $ 762 2022 678 720 42 2023 678 360 (318) $ 2,034 $ 2,520 $ 486 Required: 2. Prepare any 2024 journal entry related to the change.
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,816,000. Its useful life was estimated to be six years with a $224,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: ($ in thousands) Year Straight-Line Declining Balance Difference 2018 $ 432 $ 938 $ 506 2019 432 626 194 2020 432 417 (15 ) $ 1,296 $ 1,981 $ 685 Required:2. Prepare any 2021 journal entry related to the change. (Enter your answers in dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 2016, Al's Sporting Goods purchased store fixtures at a cost of $180,000. The anticipated service life was ten years with no residual value. Al's has been using the double-declining balance method, but in 2018 adopted the straight-line method because the company believes it provides a better measure of income. Al's has a December 31 year-end. The journal entry to record depreciation for 2018 is ______.
For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,832,000. Its useful life was estimated to be six years with a $228,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year ($ in thousands) Straight-Line Declining Balance Difference 2021 $ 434 $ 944 $ 510 2022 434 629 195 2023 434 420 (14) $ 1,302 $ 1,993 $ 691 Required: 2. Prepare any 2024 journal entry related to the change. Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,752,000. Its useful life was estimated to be six years with a $208,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year ($ in thousands) Straight-Line Declining Balance Difference 2021 $ 424 $ 917 $ 493 2022 424 611 187 2023 424 408 (16) $ 1,272 $ 1,936 $ 664
The Canliss Milling Company purchased machinery on January 2, 2014, 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 2014 and 2015. Early in 2016, 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 2015–2016 comparative financial statements. 2. Prepare any 2016 journal entry related to the change.
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,970,000. Its useful life was estimated to be six years, with a $216,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: ($ in thousands) Year Straight Line Declining Balance Difference 2018 $ 459 $ 990 $ 531 2019 459 660 201 2020 459 440 (19 ) $ 1,377 $ 2,090 $ 713 Required:2. Prepare any 2021 journal entry related to the change.
On July 2, 2013, Sable Company purchased a building for $300,000 that had an estimated residual value of $46,000 and an expected useful life of ten years. Sable Company has a December 31st, year end. If Sable Company uses the Declining Balance Method at the straight-line rate, the depreciation expense for year two is: $27000, $28500, $25400, $30000, or none of the above
Presented below is information related to equipment owned by Porto Company at December 31, 2017. Cost $5,600,000 Accumulated depreciation to date 640,000 Expected future net cash flows 4,000,000 Fair value 2,720,000 Assume that Porto will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years.How much is the Loss on Impairment? If there is no loss, enter “0.”
Equipment was purchased on January 2, 2017, for $24,000,but no portion of the cost has been charged to depreciation.The corporation wishes to use the straight-linemethod for these assets, which have been estimated tohave a life of 10 years and no salvage value. What effectdoes this error have on net income in 2017? What entry isnecessary to correct for this error, assuming that the booksare not closed for 2017?