Question #4 (16 marks) Parts A, B and C are independent.

Part A. (6 marks)

Stacey Corporation had been depreciating equipment over a 10-year useful life on a straight-line basis. The equipment, which cost $24,000 and has an estimated residual value of $6,000 was purchased on January 1, 2016. On the basis of experience since acquisition, management has decided in 2020 to depreciate it over a total of 14 years, instead of 10 years, with no change in the estimated residual value. The change is to be effective on January 1, 2020.

Required:

1. Identify the type of accounting change involved and state what approach should be used i.e. prospective without restatement, retrospective with partial statement or retrospective will full statement. (2 marks).

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2. Prepare the entry, or entries, to appropriately reflect the change (if any) and to record the depreciation expense for 2020, the year of the change. (4 marks)

	Debit	Credit

Part B.(4 marks)

In 2020, Cathode Corporation, a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated by $40,000 in both 2018 and 2019 for financial reporting purposes. Net income in 2020 is correct. The tax rate is 30%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. 2020 books are not closed.

Required: Record the entry in 2020 to correct the error.

	Debit	Credit

Question #4 (continued)

Part C (6 marks)

In December 2020, the accountant for Eagle Corp. , a public company, noted that the following errors had been made by the bookkeeper:

1. Sales for 2019 included $16,500 that had been received in cash during 2019, but for which the related products were delivered in 2020. Title did not pass to the purchaser until 2020.
2. Ending inventory on December 31, 2019, was understated by $5,640. The December 31, 2020 ending inventory has not been adjusted to the Inventory account. Assume that Eagle has a periodic inventory system and that no adjustment has been made to the opening balance of the Inventory account.

Required: Prepare the journal entries that the companys accountant would prepare in 2020, assuming that the errors are discovered while 2020 books are still open. Ignore income tax effects.

Item 1	Debit	Credit
Item 2