Question

9) Cedar Company purchased equipment that cost $100,000 on January 1, 2019. The entire cost was recorded as an expense. The equipment had a ten-year life. Cedar uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Cedar is subject to a 20% tax rate.

What is the adjustment to retained earnings at January 1, 2022? _______

11) Saturn Company purchased a machine on January 1, 2018, for $900,000. At the date of acquisition, the machine had an estimated useful life of ten years with no salvage. The machine is being depreciated on a straight-line basis. On January 1, 2022, Saturn determined that the machine had an estimated useful life of 15 years from the date of acquisition with no salvage. An accounting change was made in 2022 to reflect this additional information.

What is the amount of depreciation expense for the year ended December 31, 2022? _______

12) When preparing a statement of cash flows (indirect method), a sale of equity securities is an investing activity. (answer True or False)

Answer 1

1. Addition to retained earnings : $56,000/-

2. Depreciation for the year 31 dec 2022 = $49,091/-

3. True