The comparative statements for Hessey Inc. follow: The following additional information is provided: 1. In 2014, Hessey

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The comparative statements for Hessey Inc. follow:

The comparative statements for Hessey Inc. follow:
The following additional information

The following additional information is provided:
1. In 2014, Hessey decided to change its depreciation method from sum-of-the-years'-digits to the straight-line method due to a change in pattern of usage. The assets were purchased at the beginning of 2013 for $90,000 with an estimated useful life of four years and no residual value. (The 2014 income statement contains depreciation expense of $27,000 on the assets purchased at the beginning of 2013.)
2. In 2014, the company discovered that the ending inventory for 2013 was overstated by $20,000; ending inventory for 2014 is correctly stated.
Hessey follows ASPE.
Instructions
(a) Prepare the revised statements of retained earnings for 2013 and 2014, assuming comparative statements (ignore income tax effects). Do not prepare notes to the financial statements.
(b) Identify other possible accounting treatments for the change in depreciation method under alternative circumstances.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Intermediate Accounting

ISBN: 978-1118300855

10th Canadian Edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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