Quayle Company acquired machinery on January 1, 2005 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2010, Quayle estimated that the remaining useful life of this machinery was six years with no salvage value. How should this change be accounted for by Quayle? As a prior period adjustment O As the cumulative effect of a change in accounting principle in 2010. O By setting future annual depreciation equal to one-sixth of the book value on January 1, 2010 O By continuing to depreciate the machinery over the original fifteen year life.

Quayle Company acquired machinery on January 1, 2005 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2010, Quayle estimated that the remaining useful life of this machinery was six years with no salvage value. How should this change be accounted for by Quayle? As a prior period adjustment O As the cumulative effect of a change in accounting principle in 2010. O By setting future annual depreciation equal to one-sixth of the book value on January 1, 2010 O By continuing to depreciate the machinery over the original fifteen year life.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 5MC: During 2019, White Company determined that machinery previously depreciated over a 7-year life had a...

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