Canliss Milling Company purchased machinery on January 2, 2009, for $800,000. A five-year life was estimated and
Question:
Canliss Milling Company purchased machinery on January 2, 2009, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the double-declining balance method and recorded depreciation of $320,000 in 2009 and $192,000 in 2010. Early in 2011, the company changed its depreciation method to the straight-line method.
Required:
1. Briefly describe the way Canliss should report this accounting change in the 2010–2011 comparative financial statements.
2. Prepare any 2011 journal entry related to the change.
Step by Step Answer:
Requirement 1 In general we report voluntary changes in accounting principles retrospectively Howeve...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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