Chang Company has a December 31 year end. In year 7 it bought a piece of...

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Chang Company has a December 31 year end. In year 7 it bought a piece of equipment at the start of the year for $572,500 and employed straight line depreciation over 5 years with an estimated residual value of $71,250. At the start of year 8 Chang decides to change the depreciation method to double declining balance (same life and salvage). This is considered a change in accounting policy and you are asked to solve it. Required 1: What is the amount of Depreciation Expense reported at December 31st of Year 7 before knowing the accounting policy will change? $ Required 2: What is the amount of Depreciation Expense to be reported for the year ended December 31st of Year 8? $ Required 3: What is the amount of Accumulated Depreciation that is retroactively recognized for year 7 when depreciation method is changed? $ Required 4: What is the Net Book Value of the equipment on December 31st of Year 7 before knowing the accounting policy will change? $ Required 5: What is the Net Book Value of the equipment on December 31st of Year 8? $ Required 6: If Net Income has to be retroactively restated, by how much Net Income of Year 7 will increase (decrease) when the change in accounting policy becomes effective in year 8? $ Chang Company has a December 31 year end. In year 7 it bought a piece of equipment at the start of the year for $572,500 and employed straight line depreciation over 5 years with an estimated residual value of $71,250. At the start of year 8 Chang decides to change the depreciation method to double declining balance (same life and salvage). This is considered a change in accounting policy and you are asked to solve it. Required 1: What is the amount of Depreciation Expense reported at December 31st of Year 7 before knowing the accounting policy will change? $ Required 2: What is the amount of Depreciation Expense to be reported for the year ended December 31st of Year 8? $ Required 3: What is the amount of Accumulated Depreciation that is retroactively recognized for year 7 when depreciation method is changed? $ Required 4: What is the Net Book Value of the equipment on December 31st of Year 7 before knowing the accounting policy will change? $ Required 5: What is the Net Book Value of the equipment on December 31st of Year 8? $ Required 6: If Net Income has to be retroactively restated, by how much Net Income of Year 7 will increase (decrease) when the change in accounting policy becomes effective in year 8? $

Answer rating: 100% (QA)

To solve the given problem lets calculate the required values step by step Required 1 Amount of Depreciation Expense reported at December 31st of Year 7 before knowing the accounting policy will chang... View the full answer