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A. company has purchased a plece of equipment for $50,000. The equipment has a 5-year useful life and $5,000 residual value. Consider the following independent
A. company has purchased a plece of equipment for $50,000. The equipment has a 5-year useful life and $5,000 residual value. Consider the following independent scenario6: Scenarlo A: After 2 years of using the eculpment, the company estimates that the residual value is likely only going to be $1,000. Scenarlo B: The company captalizes the ttem, and then amertizes it over 6 years, but for gets to dedud the residual value when calculating the depredation. Scenarlo C. After 2years of using the equlpment, the company decides to switch to the double dedining balance method to depreclate the asset. Scenarlo D: The company expenses the item in the year of purchase. Scenarlo E: At the end of second year, the company determines they will likely only be able to use the asset for 1 more year. Required: Identify whether this is a change in accounting policy, estimate or an error. Determine whether retrospedve or prospedive treatment is required
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