Reference no: EM133143394

Questions -

Q1. Quinlan Corporation purchased Equipment for $64,900 on January 1, 2018. It was depreciated based on a seven-year life and an $13,800 residual value. On January 1, 2020, Quinlan revised these estimates to a total useful life of four years and a residual value of $10,800.

Prepare Quinlan's entry to record 2020 depreciation expense. Assume that Quinlan follows IFRS and uses straight-line depreciation.

Q2. Tracy Ltd. purchased a piece of equipment on January 1, 2016, for $1,350,000. At that time, it was estimated that the machine would have a 15-year life and no residual value. On December 31, 2020, Tracy's controller found that the entry for depreciation expense was omitted in error in 2017. In addition, Tracy planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2020. Tracy currently uses the straight-line method for depreciating equipment.

Prepare the general journal entries, if any, the accountant should make at December 31, 2020. (Ignore tax effects.)

Prepare the general journal entries, if any, the accountant should make at December 31, 2020. Factor in tax effects. The company has a 25% tax rate for 2016 to 2020.

Q3. Matusek Corporation has been experiencing a higher than expected number of warranty claims in the current year, due mainly to less than ideal product design. For this reason, the warranty expense percentage used was changed from 3% to 4% of sales. The warranty expense for the current year was calculated using the new rate of 4% of sales. The controller estimates that if the new rate had been used in the past, an additional $125,000 worth of warranty expense would have been recorded.

Does this change require a change in accounting policy?

What journal entry, if any, should Matusek record at the end of the fiscal year ending December 31, 2020?