Prepare the entry to appropriately reflect the change

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Reference no: EM132972035

Stacey Corporation had been depreciating equipment over a 10-year useful life on a straight-line basis. The equipment, which cost $24,000 and has an estimated residual value of $6,000 was purchased on January 1, 2016. On the basis of experience since acquisition, management has decided in 2020 to depreciate it over a total of 14 years, instead of 10 years, with no change in the estimated residual value. The change is to be effective on January 1, 2020.

Required:

Problem 1. Identify the type of accounting change involved and state what approach should be used i.e. prospective without restatement, retrospective with partial statement or retrospective will full statement.

Problem 2. Prepare the entry, or entries, to appropriately reflect the change (if any) and to record the depreciation expense for 2020, the year of the change.

Reference no: EM132972035

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