Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

While reviewing Zosias financial statements, your boss was concerned that they had change the method of accounting for depreciation from 130% declining balance to straight

While reviewing Zosias financial statements, your boss was concerned that they had change the method of accounting for depreciation from 130% declining balance to straight line for their equipment. The footnote explaining the accounting change provided the following explanation. The original reason that Zosia used 130% declining balance was that based on an engineering study that the increase in maintenance costs of the equipment as it aged mirrored the decline in the depreciation expense so the sum of the two remained constant year to year. The reason they changed to straight line is that a current study determines that even though maintenance costs still increase with the age of the equipment, they are significantly lower than in the past. Evaluate whether you believe the change was warranted.

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions