Moocopa Corp. has been depreciating equipment over a year life on a straightline basis. The equipment, which cost $ was purchased on  January X It has an estimated residual value of $ On the basis of experience since acquisition, management has decided in X to depreciate it over a total life of  years instead of  years, with no change in the estimated residual value. The change is to be effective on  January X The X financial statements are prepared on a comparative basis; X and X incomes before depreciation were $ and $ respectively. Disregard income tax considerations. 

 

Required:

a Analyze the effects of the change. Amounts to be deducted should be indicated by a minus sign.

b Which approach should be usedprospective without restatement, retrospective with partial restatement, or retrospective with full restatement?

Prepare the entry, to appropriately reflect the X depreciation in the accounts for X the year of the change. If no entry is required for a transactionevent select No journal entry required\" in the first account field.

Show how the accounting change, the equipment, and the related depreciation should be reported on the X financial statements, including comparative X results.