FAR SIMS Help

  • This topic has 2 replies, 2 voices, and was last updated 7 years ago by Anonymous.
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  • #1865089
    Anonymous
    Inactive

    Hi,

    I’m doing the SIM for the AICPA sample exampe for FAR.
    Could any other show me on this is the JE?

    On January 1, year 1, WSM Co. purchased office furniture at a cost of $90,000. Book depreciation was calculated using the double-declining balance method over an estimated useful life of 10 years for the first three years after purchase, and accumulated depreciation at December 31, year 3, was $43,920. At the end of year 3, the estimated useful life of the furniture was changed from 10 to 15 years, effective January 1, year 4, and the depreciation method was changed to the straight-line method with no salvage value.

    Prepare the entry, if any, required to record WSM’s depreciation expense for year 4.

    ANSWER:
    Depreciation expense
    3,840

    Accumulated depreciation

    3,840

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  • #1865092
    Anonymous
    Inactive

    When the switch is effective, the asset has a carrying value of $46,080 (original cost $90,000 minus $43,920 of AD). The change in estimate is applied prospectively in year 4.

    The estimated asset life increases by 5 years (10 to 15 years). At the time of this estimate change, the asset has 7 years remaining in its life (10 minus 3 years). Therefore, there is now 12 years remaining (7 + 5). The carrying value of $46,080 is divided by 12 which equals $3,840 depreciation expense for the year.

    #1865104
    Anonymous
    Inactive

    Thanks Greg.

    Also, did you do the SIMS on the AICPA sample test?

    Do you know how I could find the interest expense, income tax expense (benefit) , (Gain) on discontinued operations and Income tax expense on discontinued?

    I can't seem to find it. This is the question on Oak Company's Income statement.

    Thanks,

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