Reference no: EM132530033

Question -

Q1. Big Company changed its depreciation method in 2015 from double declining balances to straight lines. Depreciation under multiple decreases is $ 90,000, while straight line depreciation before 2015 will be $ 50,000. Depreciable assets belonging to the Big Company have a base price of $ 250,000 with a residual value of $ 40,000 and a useful life of 8 years at the beginning of 2015. Make a 2015 journal entry, if any, relating to the depreciable assets of Big Company.

Q2. On January 1, 2015, King Company reported a retained earnings of $ 20,000,000. In 2015, King found that the 2015 depreciation expense was understated at $ 4,000,000. In 2015, there was a net profit of $ 9,000,000 and a declared dividend of $ 2,500,000. The tax rate charged is 40%. Make a 2015 retained earnings report for King Company.