Chapter 20 Acct Changes Connect Assignment Help Save & Exit Submit Check my work

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Chapter 20 Acct Changes Connect Assignment Help Save & Exit Submit Check my work During 2016 and 2017, Faulkner Manufacturing used the sum-of-the-years-cligits (SYD) method of depreclation for its depreclable vssets, for both firerici??eporung bnd tax purposes. At the beginning of 2018, Faulkner decided to change to the straight-line method for both financial reporting and tax purposes A tax rate of 40% is in erect for all years. For an asset that cost $29,200 with an estimated resicual value of $1,200 and an estimated useful life of 10 years, the depreclation under different methods is as follows YearStraight LincSYD Differanca $2, Hee 35,291 eBouk 817 $5,600 9,673 5 4,073 Reie ences Required: 1. Prepare the joumal entry that Faulkner will recard in 2018 related to the change. 2. Suppose Instead that Faulkner prevlously used straight-ine depreclation and changed to sum-of-the-years- digits in 2018. Prepare the Journal entry tial Faulkner will record in 2018 related to the ch nge. Complete this question hy entering your answers in the tahs helow. Roquired 1Roquircd 2 Prepare the journal entry that Faulkner will record in 2018 related to the change. (if no entry is required for a dollar.) s ect "No journal entry required" in hhe first nocount field. Round your final ??wers to nearest whole View transaction list Journal entry worksheet

Explanation / Answer

1.

Carrying value of asset at beginning of 2018 = $29200 - $9673 = $19527

Remaining useful life = 10 - 2 = 8 years

Straight-line depreciation for 2018 = ($19527 - $1200)/8 years = $18327/8 years = $2290.875 = $2291

2.

Carrying value of asset at beginning of 2018 = $29200 - $5600 = $23600

Remaining useful life = 10 - 2 = 8 years

Sum-of-the-year's-digits = 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 = 36

SYD for 2018 = ($23600 - $1200) x 8/36 = $22400 x 8/36 = 4977.78 = $4978

Note: Change in the depreciation method is a change in an accounting estimate and hence is accounted for prospectively. The remaining depreciable cost is depreciated using the new method over the remaining useful life of the asset.

Event General Journal Debit Credit 1 Depreciation expense 2291 Accumulated depreciation 2291 (To record depreciation expense for 2018)

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