Canliss Milling Company purchased machinery on January 2, 2009, for $800,000. A five-year life was estimated and
Question:
Required:
1. What type of accounting change is this?
2. Briefly describe the accounting treatment for this change.
3. Determine depreciation for 2011.
Step by Step Answer:
Requirement 1 This is a change in accounting estimate Requirement 2 When an estim...View the full answer
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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