Rodriguez Corp. changed from the straight- line method of depreciation on its plant assets acquired in early
Question:
Rodriguez Corp. changed from the straight- line method of depreciation on its plant assets acquired in early 2021 to the double-declining-balance method in 2023 (before finalizing its 2023 financial statements) because of a change in the pattern of benefits received. The assets had an eight-year life and no expected residual value. Information related to both methods follows:
Net income for 2022 was reported at $270,000; income for 2023 before depreciation and income tax is $300,000. Assume an income tax rate of 30%.
Instructions
The change from the straight-line method to the double-declining-balance method is considered a change in estimate.
a. What net income is reported for 2023?
b. What is the amount of the adjustment to opening retained earnings as at January 1, 2023?
c. What is the amount of the adjustment to opening retained earnings as at January 1, 2022?
d. Prepare the journal entry(ies), if any, to record the adjustment in the accounting records, assuming that the accounting records for 2023 are not yet closed.
Step by Step Answer:
Intermediate Accounting Volume 2
ISBN: 9781119740445
13th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy