Chap020 (accounting) 54 - from a change in accounting...

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42. B Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in 2011. The change affects machinery purchased at the beginning of 2009 at a cost of $72,000. The machinery has an estimated life of five years and an estimated residual value of $3,600. What is B's 2011 depreciation expense? A. $9,120 B. $13,680 C. $15,840 D. $19,200 The depreciation prior to the change is as follows: Since a change in depreciation method is considered a change in accounting estimate resulting
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Unformatted text preview: from a change in accounting principle, B reports the change prospectively, just like a change in estimate. B depreciates the remaining undepreciated cost on a S-L basis over the remaining useful life: AACSB: Analytic Bloom's: Application Learning Objective: 20-03 Explain how and why some changes in accounting principle are reported prospectively. Level of Learning: Hard...
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