Makins Ltd. purchased a machine on January 1, 2009, for $1,350,000. At that time, it was estimated that the machine would have a 10-year life and no residual value. On December 31, 2012, the firm’s accountant found that the entry for depreciation expense had been omitted in 2010. In addition, management informed the accountant that it planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2012. At present, the company uses the straight-line method for depreciating equipment.
Instructions
(a) Prepare the general journal entries, if any, the accountant should make at December 31, 2012. (Ignore tax effects.)
(b) Assume the same information as above, but factor in tax effects. The company has a 34% tax rate for 2009 to 2012.