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    Depreciation and accounting change for Wardell, Clinton Poultry

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    E 11-18. Wardell Company purchased a minicomputer on January 1, 2009, at a cost of 440,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $4,000. On January 1, 2011, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $900.

    Required

    1. Prepare the appropriate adjusting entry for depreciation in 2011 to reflect the revised estimate

    E11--20
    a. For financial reporting, Clinton Poultry Farm has used the declining balance method of depreciation for conveyor equipment acquired at the beginning 2008 for $2,560,000. Its useful life was estimaterd to be six years, with a $160,000 residual balance. At the beginning of 2011, Clinton decides to change to the straight line method. The effect of this change on depreciation for each year is as follows:
    ($ in 000s)
    Year Straight line Declining Balance Difference
    2008 $ 400 $ 853 $453
    2009 $ 400 $ 569 $ 169
    2010 $ 400 $379 $ (21)
    $1,200 $1,801 $601
    Required
    1. Briefly describe the way Clinton should report this accounting change in 2010-2011 comparative financial statements.
    2. Prepare 2011 journal entry related to change

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    https://brainmass.com/business/accounting/depreciation-accounting-change-wardell-clinton-poultry-422972

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    Solution Summary

    Calculations for depreciation and accounting change for Wardell and Clinton Poultry are examined.

    $2.19

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