On 1 July 2018, Phoenix Ltd acquired equipment for $1 000 000 with an estimated life of 20 years and a residual value of nil. Phoenix Ltd uses the straight-line method of depreciation. At 1 July 2022, experts have advised that due to climate change impacts, the machinery should be depreciated over a total period of 10 years.

Required:(You may ignore tax and the time value of money; no journal narrations are required)

1. Is this a change in estimate or change in accounting policy? (Hint: see AASB 108 (Accounting Policies, Changes in Accounting Estimates and Errors - paragraph 32(d))(1 mark)
2. Assuming it is a change in estimate, show the journal entries relating to the equipment from 1 July 2018 to 30 June 2023. You may ignore tax and the time value of money. Please refer to AASB 108 (Accounting Policies, Changes in Accounting Estimates and Errors - paragraphs 32-40)(5 marks)
3. Prepare the note required by AASB 108 (Accounting Policies, Changes in Accounting Estimates and Errors) for this change by Phoenix Ltd for the year ended 30 June 2023. (2 marks)

Answer rating: 100% (QA)

Is this a change in estimate or change in accounting policy Based on AASB 108 this situation qualifi... View the full answer