ASSIGNMENT 2: ACCOUNTING CHANGES AND ERRORS ANALYSIS INTERMEDIATE ACCOUNTING II (ACC320) SEMESTER II, 2022-2023

Horizon Company is in the process of preparing its financial statements for 2022. The company has made few changes in accounting estimates. Assume that no entries for depreciation have been recorded in 2022. The following information related to depreciation of fixed assets is provided to you. 1)Horizon purchased equipment on January 2, 2019, for $85,000. At that time, the equipment had an estimated useful life of 10 years with a $5,000 residual value. The equipment is depreciated on a straight-line basis. On January 2, 2022, as a result of additional information, the company determined that the equipment has a remaining useful life of 4 years with a $3,000 residual value. 2)During 2022, Horizon changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $300,000 and was purchased on May 1, 2020. It had a useful life of 10 years and a residual value of $30,000. 3)Horizon purchased a machine on July 1, 2020, at a cost of $120,000. The machine has a residual value of $16,000 and a useful life of 8 years. Horizons bookkeeper recorded straight-line depreciation in 2020 and 2021 but failed to consider the residual value.

REQUIRED:

Prepare the journal entries to record depreciation expense for 2022 for all plant assets and correct errors (if any) made to date related to the information provided. Please shows all relevant computations.