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As at December 3 1 , 2 0 2 3 , Oriole Corporation is having its financial statements audited for the first time ever. The
As at December Oriole Corporation is having its financial statements audited for the first time ever. The auditor has found a
Prepare the necessary journal entries to record each of the changes or errors. The books for have been adjusted but not
closed. Ignore income tax effects. List all debit entries before credit entries. Round answers to O decimal places, eg Credit
account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select No Entry" for
the account titles and enter for the amounts.
No Account Titles and Explanation
Debit
Credit
the following items that might have an effect on previous years.
Oriole purchased equipment on January for $ At that time, the equipment had an estimated useful life of
years, with a $ residual value. The equipment is depreciated on a straightline basis. On January as a result of
additional information, the company determined that the equipment had a total useful life of seven years with a $
residual value.
During Oriole changed from the doubledecliningbalance method for its building to the straightline method because
the company thinks the straightline method now more closely follows the benefits received from using the assets. The
currentyear depreciation was calculated using the new method following straightline depreciation. In case the following
information was needed, the auditor provided calculations that present depreciation on both bases. The building had
originally cost $ million when purchased at the beginning of and has a residual value of $ It is depreciated
over years. The original estimates of useful life and residual value are still accurate.
Oriole purchased a machine on July at a cost of $ The machine has a residual value of $ and a useful
life of eight years. Oriole's bookkeeper recorded straightline depreciation during each year but failed to consider the
residual value.
Prior to development costs were expensed immediately because they were immaterial. Due to an increase in
development phase projects, development costs have now become material and management has decided to capitalize and
depreciate them over three years. The development costs meet all six specific conditions for capitalization of development
phase costs. Amounts expensed in and were $$ and $ respectively. During $ was
spent and the amount was debited to Deferred Development Costs an asset account
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