On January 1, 2016, Dawson Corp. bought machinery for $800,000. They used double declining balance depreciation...
- On January 1, 2016, Dawson Corp. bought machinery for $800,000. They used double declining balance depreciation for this asset, with an estimated life of 8 years, and an estimated $200,000 residual value. At the beginning of 2019, Dawson decided to change to the straight-line method of depreciation for this equipment and treated the change as a change in estimate. For the calendar year 2019, the depreciation expense for this machinery is:
- $100,000
- $92,500
- $75,050
- $27,500
- Which of the following subsequence events (Post-statement of financial position events) would require an adjustment of the accounts before issuance of the financial statements?
- Major losses as a result of a fire in the company’s plant
- Decline in the fair value of investments
- Loss in accounts receivable (on the books at statement of financial position date) resulting from customer’s bankruptcy.
- Lawsuit arising from a customer’s injury due to defective product.
Homework Answers
1.
2 correct answer is Option D
- Lawsuit arising from a customer’s injury due to defective product s is the subsequence events (Post-statement of financial position events) would require an adjustment of the accounts before issuance of the financial statements.
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On January 1, 2016, Dawson Corp. bought machinery for $800,000.
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