For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired
Question:
For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,560,000. Its useful life was estimated to be six years with a $160,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:
Required:
1. Will Kumas apply the straight-line method retrospectively or apply the straight-line method prospectively?
2. Prepare any 2024 journal entry related to the change.
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