Brief Exercise 11-11 Change in principle; change in depreciation method [L011-6

Question

Brief Exercise 11-11 Change in principle; change in depreciation method [L011-6 At the beginning of 2016, Robotics Inc. acquired a manufacturing facility for $14.0 million. $11.0 million of the purchase price was allocated to the building. Depreciation for 2016 and 2017 was calculated using the straight-line method, a 20-year useful life, and a $3.0 million residual value. In 2018, the company switched to the double-declining-balance depreciation method What is depreciation on the building for 2018? (Do not round intermediate calculations. Round answer to the nearest whole dollar.) Depreciation 124,667

Explanation / Answer

Answer)

Here,it is assumed that change in depreciation policy doesn't consider retrospectively.

The value of the asset at beginning of 2018:

$11000000-$800000(i.e $($11million-3million)×1/20×2years)

=$10200000

Depreciation to be changed for year 2018:

$10200000/18years×200%

=$11,33,333 or$11,33,334 consider the answer that the system accepts.

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