FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Following an internal audit of Wilkinson Limited, a manufacturing company for the
year 2023, the following items were brought to the attention of the Accountant. The
Accountant is unsure how to proceed. She has hired you as a consultant to assist
her.
1. Wilkinson Company changed depreciation methods in 2023 from double-
declining-balance to straight-line. The accumulated depreciation prior to 2023
under double-declining-balance was $90,000, whereas the straight-line
accumulated depreciation prior to 2023 would have been $50,000. Wilkinson’s
depreciable assets had a cost of $250,000, with a $40,000 residual value and an
8-year remaining useful life at the beginning of 2023.
Requirements:
I. Discuss the appropriate accounting treatment for the above.
II. Prepare the 2023 journal entry related to the depreciable assets, if
necessary. Ignore income tax effects. Show workings
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