Part A $-$ ID Prospactively or Retrospectively

E$22\mathrm{.}10($LO $1,2,3)($Accounting for Accounting Changes and Errors$)$ Listed below are various types of accounting changes and errors.

Change in a plant asset's salvage value.

Change due to overstatement of inventory.

Change from sum$-$of$-$the$-$years'$-$digits to straight$-$line method of depreciation.

Change from presenting unconsolidated to consolidated financial statements.

Change from LIFO to FIFO inventory method.

Change in the rate used to compute warranty costs.

Change from an unacceptable accounting principle to an acceptable accounting principle.

Change in a patent's amortization period.

Change from completed$-$contract to percentage$-$of$-$completion method on construction contracts.

Change from FIFO to average$-$cost inventory method.

Instructions

For each change or error, indicate how it would be accounted for using the following code letters:

a$.$ Accounted for prospectively.

b$.$ Accounted for retrospectively,

c$.$ Neither of the above.

Phrt B $-$ Depreciation Changes

E$22\mathrm{.}12($LO $2)($Depreciation Changes$)$ On January $1,2017,$ Jackson Company purchased a building and equipment that have the following useful lives, salvage values, and costs.

Building, $40-$year estimated useful life, $$50,000$ salvage value, $$800,000$ cost

Equipment, $12-$year estimated useful life, $$10,000$ salvage value, $$100,000$ cost

The building has been depreciated under the double$-$declining$-$balance method through $2020.$ In $2021,$ the company decided to switch to the straight$-$line method of depreciation. Jackson also decided to change the total useful life of the equipment to $9$ years, with a salvage value of $$5,000$ at the end of that time. The equipment is depreclated using the straight$-$line method.

Instructions

a$.$ Prepare the journal entry$($ies$)$ necessary to record the depreciation expense on the building in $2021.$

b$.$ Compute depreciation expense on the equipment for $2021.$