Chap020 (accounting) 63

# Chap020 (accounting) 63 - 55 Goosen Company bought a...

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55. Goosen Company bought a copyright for \$90,000 on January 1, 2008, at which time the copyright had an estimated useful life of 15 years. On January 5, 2011, the company determined that the copyright would expire at the end of 2016. How much should Goosen record retrospectively as the effect of change? A. \$0. B. \$12,000. C. \$8,000. D. \$14,400. This is a change in estimate, which is reported using the prospective approach. AACSB: Analytic Bloom's: Application Learning Objective: 20-04 Explain how and why changes in estimates are reported prospectively. Level of Learning: Medium 56. Lundholm Company purchased a machine for \$100,000 on January 1, 2009. Lundholm
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Unformatted text preview: depreciates machines of this type by the straight-line method over a ten-year period using no salvage value. Due to a change in sales patterns, on January 1, 2011, management determines the useful life of the machine to be a total of six years. What amount should Lundholm record for depreciation expense for 2011? The tax rate is 40%. A. \$20,000. B. \$16,000. C. \$17,778. D. \$26,667. 2009, 2010: \$100,000 10 = \$10,000 2011: [\$100,000 - (\$10,000 x 2)] 4 = \$20,000 AACSB: Analytic Bloom's: Application Learning Objective: 20-04 Explain how and why changes in estimates are reported prospectively. Level of Learning: Hard...
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