Answered: What is the impact of the error in 2022…

Business

Accounting

What is the impact of the error in 2022 net income?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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BTS Company purchased machinery for P250,000 on July 1, 2018. Freight and installation costs incurred by BTS Company amounted to P18,000. The asset is estimated to have a useful life of 5 years and an estimated salvage value of P20,000. It is the company’s policy to depreciate this machinery to the nearest month using double-declining balance method.On January 1, 2020, the company spent P79,360 for the upgrade of this machinery that improved its condition beyond its original assessed standard of performance that led to a significant improvement in the quality of its output. At this time, the machinery’s estimated residual value has changed to P40,000 and the company decides to change to the straight-line method.How much is the revised depreciation expense for this machinery for the year ended December 31, 2020?
Hadley Zavis Inc. started its unicycle manufacturing business in 2020 and acquired $600,000 of equipment at the beginning of 2020. It decided to use the double-declining balance (DDB) depreciation on its equipment with no residual value and a 10-year useful life. In 2022 it changed to the straight-line depreciation method. Depreciation computed for 2020-2021 is presented below: Year DDB 2020 $120,000 2021 96,000 In 2022, what would Harley Davis report for depreciation expense?
A new barcode reading device has an installed cost basis of $21,700 and an estimated service life of seven years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset a. What will the depreciation charge be in year seven? b What is the book value at the end of year six? c What is the gain (or loss) on the disposal of the device if it is sold for $3,000 after six years? a. The depreciation charge in year seven will be (Round to the nearest dollar.) b The book value at the end of year six is $ (Round to the nearest dollar.) c The on the disposal of the device if it is sold for $3,000 after six years is $1. (Round to the nearest dollar.) gain loss
Dd.62.
The Canliss Milling Company purchased machinery on January 2, 2019, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2019 and 2020. Early in 2021, the company changed its depreciation method to the sum-of-the-years’-digits (SYD) method. Required:2. Prepare any 2021 journal entry related to the change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the adjusting entry for depreciation in 2021.
Babcock Company purchased a piece of machinery for $40,500 on January 1, 2019, and has been depreciating the machine using the sum-of-the-years'-digits method based on a five-year estimated useful life and no salvage value. On January 1, 2021, Babcock decided to switch to the straight-line method of depreciation. The salvage value is still zero and the estimated useful life is changed to a total of six years from the date of purchase. Ignore income taxes. Required: 1. Prepare the appropriate journal entry, if any, to record the accounting change under GAAP. 2. Prepare the journal entry to record depreciation for 2021.
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,800. The cost of the building was $96,000. The current book value of the equipment (January 1, 2021) is $81,600. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2021, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,800. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects. 1. Prepare the journal entry, if any, to report the accounting change under GAAP. 2. Record the annual depreciation for 2021.
Concord Corporation bought a machine on January 1, 2011 for $807000. The machine had an expected life of 20 years and was expected to have a salvage value of $77000. On July 1, 2021, the company reviewed the potential of the machine and determined that its future net cash flows totaled $403000 and its fair value was $298000. If the company does not plan to dispose of it, what should Concord record as an impairment loss on July 1, 2021? a. $20750 b. $0 c. $28000 d. $125750
Popeye Company purchased a machine for $350,000 on January 1, 2020. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2020. Popeye discovered the error in 2021. What amount should Popeye record as depreciation expense for 2021? The tax rate is 25%. O O O O $105,000. $52,500. $70,000. $140,000.
ABC Corporation bought an equipment with a total cost of P4,000,000 on Jan. 1, 2016. It was depreciated using the straight-line method over 20 years with a salvage value of P400,000. On Jan. 1, 2020, there is a foreseen decrease in the useful life of the equipment to only 8 remaining years. Hence, the asset is being tested for impairment. The current fair value less cost to sell is P600,000 while the salvage value at the end of the useful life is P400,000. Annual net operating cash flows is foreseen to be at P200,000 per year. The effective interest rate to be used for impairment testing is 6%. How much is the impairment loss?
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Sam’s Catering purchased a delivery vehicle of R150 000 on 1 June 2021 on credit. Sam was advised that the residual value of this truck is estimated at R30 000. The diminishing depreciation method was adopted by Sam in utilising assets over five years. On 1 September 2021 Sam replaced equipment. The new equipment amounts to R45 000. The replaced equipment was purchased on 1 January 2018 for R30 000 and sold for R5 000. Sam uses the straight-line depreciation method over a period of four years to report on her equipment. Required -Record the above transactions in Sam’s Catering’s records through general journals for the financial year ended 31 December 2021 -Disclose the property, plant and equipment note in the financial statements for the year ended 31 December 2021