Purchase Solution

Depreciation and accounting change for Wardell, Clinton Poultry

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution

Solution Summary

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

Purchase this Solution


Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.