Question#02:

1. What do you understand by retrospective accounting changes? How does it differ from prospective reporting? Explain with examples.
2. Robillard Inc. acquired the following assets in January 2013:

Equipment, estimated service life, 5 years; residual value, Tk. 15,000	Tk. 465,000
Building, estimated service life, 30 years; no residual value	Tk. 780,000

The equipment has been depreciated using the double declining method for the first 2 years for financial reporting purposes. In 2015, the company decided to change the method of computing depreciation to the straight-line method for equipment, but no change was made in the estimated service life or residual value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with a change of Tk. 5,000 in the estimated residual value. The building is depreciated on the straight-line method.

Required:

1. Prepare the journal entry to record depreciation expense for the equipment in 2015.
2. Prepare the journal entry to record depreciation expense for the building in 2015.