Page 1 of3 The Hershey Company: Change in Generally Accepted Accounting Principle (GAAP) ershey Company, in Y11, adopted the new leasing accounting standards promulgated by the Suppose H Financial Accounting Standards Board. Adoption of this standard r as capital assets, and increasing depreciation expense, which conversely reduced tax expense. More specifically, the effect is shown below: esulted in capitalizing more assets Prior to Y10 Y10 $168,000$129,000 $586,000 $168,000 $129,000$586,000 $16,800 $12,900$58,600 $5,040$3,870 $17,580 Y11 Increase property, plant, and equipment Increase other long-term liabilities Increase depreciation expense Decrease tax expense due to increased depreciation charges To record this accounting change, the company debited Property, plant, and equipment and credited Other long-term liabilities to record capitalization of the leases per the new lease standard. Depreciation expense is a component of Selling, marketing, and administrative expense, Tax expense is Provision for income taxes on the income statement, and Tax payable is shown on the balance sheet as Accrued income taxes. Your journal entries will swing the account to a debit balance; that's fine, just show it as a negative liability on the balance sheet for purposes of this problem. Required: 1) Journalize the adjusting entries below, resulting from adoption of the new accounting standard 2) Update the comparative financial statements by drawing a single line through the numbers that need to be restated, writing the restated numbers as well as showing the computation needed to arrive at the restated numbers. Also on the financial state total accordingly ments, update all subtotals and DR CR Page 1 of3 The Hershey Company: Change in Generally Accepted Accounting Principle (GAAP) ershey Company, in Y11, adopted the new leasing accounting standards promulgated by the Suppose H Financial Accounting Standards Board. Adoption of this standard r as capital assets, and increasing depreciation expense, which conversely reduced tax expense. More specifically, the effect is shown below: esulted in capitalizing more assets Prior to Y10 Y10 $168,000$129,000 $586,000 $168,000 $129,000$586,000 $16,800 $12,900$58,600 $5,040$3,870 $17,580 Y11 Increase property, plant, and equipment Increase other long-term liabilities Increase depreciation expense Decrease tax expense due to increased depreciation charges To record this accounting change, the company debited Property, plant, and equipment and credited Other long-term liabilities to record capitalization of the leases per the new lease standard. Depreciation expense is a component of Selling, marketing, and administrative expense, Tax expense is Provision for income taxes on the income statement, and Tax payable is shown on the balance sheet as Accrued income taxes. Your journal entries will swing the account to a debit balance; that's fine, just show it as a negative liability on the balance sheet for purposes of this problem. Required: 1) Journalize the adjusting entries below, resulting from adoption of the new accounting standard 2) Update the comparative financial statements by drawing a single line through the numbers that need to be restated, writing the restated numbers as well as showing the computation needed to arrive at the restated numbers. Also on the financial state total accordingly ments, update all subtotals and DR CR
