Asked by
jackie manzano
on Oct 28, 2024
Verified
On January 1, 2010, Willis Company acquired equipment at a cost of $400, 000.Willis used the double-declining-balance method to depreciate the equipment with a ten-year life and no salvage value.On January 1, 2012, Willis changed to straight-line depreciation for this equipment, and the IRS accepted this change as being eligible as a change in accounting estimate with prospective treatment.Assuming an income tax rate of 30%, the restatement of January 1, 2012 retained earnings is
A) $ 0
B) $44, 800
C) $52, 640
D) $72, 100
Double-Declining-Balance
A method of accelerated depreciation that doubles the straight-line depreciation rate and applies it to the reducing book value each year.
Straight-Line Depreciation
A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, making the expense predictable.
- Analyze the consequences on financial accounts and tax obligations resulting from changes in depreciation strategies.
- Analyze the effects of changes in accounting estimates on financial reporting.
Verified Answer
AH
Learning Objectives
- Analyze the consequences on financial accounts and tax obligations resulting from changes in depreciation strategies.
- Analyze the effects of changes in accounting estimates on financial reporting.