Assume you are the accountant for a small business. Consider the following situation. On January 2,...

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Assume you are the accountant for a small business. Consider the following situation. On January 2, 2019, the business purchased a large piece of equipment for $410,000. At that time, you used straight line depreciation, with no salvage value to depreciate the equipment over 7 years. It is now January 2, 2022, you have already recorded depreciation for 2021. You realize that the estimate of useful life that you are using to calculate depreciation is inaccurate. You now estimate that the equipment will only be useful for 5 years from the date of acquisition. You are to write a message to the President, Janet Brown, describing how this change will affect the 2022 fınancial statements, both the income statement and balance sheet. Give a high level overview on how you calculated the new depreciation expense and accumulated depreciation. Also, discuss how this change will affect prior years' financial statements. Assume you are the accountant for a small business. Consider the following situation. On January 2, 2019, the business purchased a large piece of equipment for $410,000. At that time, you used straight line depreciation, with no salvage value to depreciate the equipment over 7 years. It is now January 2, 2022, you have already recorded depreciation for 2021. You realize that the estimate of useful life that you are using to calculate depreciation is inaccurate. You now estimate that the equipment will only be useful for 5 years from the date of acquisition. You are to write a message to the President, Janet Brown, describing how this change will affect the 2022 fınancial statements, both the income statement and balance sheet. Give a high level overview on how you calculated the new depreciation expense and accumulated depreciation. Also, discuss how this change will affect prior years' financial statements.

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Answer Change in Accounting estimate On January 22020 it came to know that the estimate on useful li... View the full answer