Reference no: EM133662590

Question: Following an internal audit of Wilkinson Limited, a manufacturing company for the year 2023, the following items were brought to the attention of the Accountant. The Accountant is unsure how to proceed. She has hired you as a consultant to assist her. 1. Wilkinson Company changed depreciation methods in 2023 from doubledeclining-balance to straight-line. The accumulated depreciation prior to 2023 under double-declining-balance was $90,000, whereas the straight-line accumulated depreciation prior to 2023 would have been $50,000. Wilkinson's depreciable assets had a cost of $250,000, with a $40,000 residual value and an 8-year remaining useful life at the beginning of 2023. Requirements: I. Discuss the appropriate accounting treatment for the above. (2 marks) II. Prepare the 2023 journal entry related to the depreciable assets (2 marks), if necessary. Ignore income tax effects. Show workings (6 marks) 2. Toolum Corporation began operations on January 1, 2020, and uses the averagecost method of pricing inventory. Management is contemplating a change in inventory methods for 2023. The following information is available for the years 2020-2022 Net Income using Average Cost Method FIFO Method 2020 20,000 22,000 2021 15,000 20,000 2022 25,000 30,000 Requirements: (Ignore all tax effects.) a. Prepare the journal entry necessary to record a change from the average-cost method to the FIFO method in 2023.