Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rodriguez Corp. changed from the straight-line method of depreciation on its plant assets acquired in early 2021 to the double-declining-balance method in 2023 (before finalizing

Rodriguez Corp. changed from the straight-line method of depreciation on its plant assets acquired in early 2021 to the double-declining-balance method in 2023 (before finalizing its 2023 financial statements) because of a change in the pattern of benefits received. The assets had an eight-year life and no expected residual value. Information related to both methods follows: 2021 Double-Declining-Balance Depreciation: 250,000

Straight-Line Depreciation: 125,000

Difference: $125,000

2022

Double-Declining-Balance Depreciation: 187,500

Straight-Line Depreciation: 125,000.

Difference: 62,500

2023

Double-Declining-Balance Depreciation: 140,625

Straight-Line Depreciation: 125,000

Difference: 15,625

Net income for 2022 was reported at $270,000; income for 2023 before depreciation and income tax is $300,000. Assume an income tax rate of 30%. Instructions The change from the straight-line method to the double-declining-balance method is considered a change in estimate.

a. What net income is reported for 2023? b. What is the amount of the adjustment to opening retained earnings as at January 1, 2023? c. What is the amount of the adjustment to opening retained earnings as at January 1, 2022? d. Prepare the journal entry(ies), if any, to record the adjustment in the accounting records, assuming that the accounting records for 2023 are not yet closed.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Using Financial Accounting Information The Alternative to Debits and Credits

Authors: Gary A. Porter, Curtis L. Norton

7th Edition

978-0-538-4527, 0-538-45274-9, 978-1133161646

More Books

Students also viewed these Accounting questions

Question

Differentiate between law and ethics.

Answered: 1 week ago

Question

BPR always involves automation. Group of answer choices True False

Answered: 1 week ago