# A change from the straight line method to the sum of

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65. A change from the straight-line method to the sum-of-years'-digits method of depreciation is handled as: A. A retrospective change back to the date of acquisition as though the current estimated life had been used all along. B. A cumulative adjustment to income in the current year for the difference in depreciation under the new versus old useful life estimate. C. A prospective change from the current year through the remainder of its useful life. D. None of the above is correct. AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 11-06 Explain the appropriate accounting treatment required when a change in depreciation; amortization; or depletion method is made. Spiceland - Chapter 11 #65 Topic: Explain the appropriate accounting treatment required when a change in depreciation, amortization, or depletion method is made

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66. Murgatroyd Co. purchased equipment on January 1, 2011, for \$500,000, estimating a four- year useful life and no residual value. In 2011 and 2012, Murgatroyd depreciated the asset using the sum-of-years'-digits method. In 2013, Murgatroyd changed to straight-line depreciation for this equipment. What depreciation would Murgatroyd record for the year 2013 on this equipment? The depreciation for 2011 was: \$500,000 x 4/10 = \$200,000. The depreciation for 2012 was: \$500,000 x 3/10 = \$150,000. This leaves a book value of \$150,000 (\$500,000 - 350,000), so that the new depreciation would be \$75,000 (\$150,000 ÷ 2). AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-06 Explain the appropriate accounting treatment required when a change in depreciation; amortization; or depletion method is made. Spiceland - Chapter 11 #66 Topic: Explain the appropriate accounting treatment required when a change in depreciation, amortization, or depletion method is made
67. Broadway Ltd. purchased equipment on January 1, 2011, for \$800,000, estimating a five-year useful life and no residual value. In 2011 and 2012, Broadway depreciated the asset using the straight-line method. In 2013, Broadway changed to sum-of-years'-digits depreciation for this equipment. What depreciation would Broadway record for the year 2013 on this equipment? The depreciation for 2011 and 2012 was: \$800,000 ÷ 5 = \$160,000 per year. This leaves a book value of \$480,000 (\$800,000 - 320,000) and three years remain in the asset's life. Under SYD, the remaining depreciable base would be multiplied by 3 ÷ (1 + 2 + 3) for 2013, or 3/6 x \$480,000 = \$240,000 in depreciation. AACSB: Analytic AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 11-06 Explain the appropriate accounting treatment required when a change in depreciation; amortization; or depletion method is made. Spiceland - Chapter 11 #67 Topic: Explain the appropriate accounting treatment required when a change in depreciation, amortization, or depletion method is made

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