Question

Desert, Co. purchased a truck for $50,000 on January 1, 2015. The truck had an estimated salvage value of $10,000 and an estimated useful life of 10 years. Desert uses the straight-line depreciation method. On January 1, 2018, Desert revised the estimated salvage value to $5,000, but did not change the useful life. The accountant recorded depreciation expense using the old salvage value when calculating the $500,000 ICO. 1. Is an adjustment needed to Desert's Income for Continuing Operations for 2018? Yes 1A. If yes, what type of adjustment? Prospectively 1B. If yes, what is that amount of the adjustment needed? [Select]

Answer 1

GIven that puchased huck jan Desert Co $50000o 2015 Salnge Estimated value 10 yea eiaien uing Me thod S.LM AS Jan ,2018, on Accumulated Deprecia ton : ep p y 3ya X Dep pe yea Cont value 50000 Io000 44 o00 Thernfore, Aewmloted o^preriston : #uoo syd 12000 1 Net Beok ole of uck PArchare Cont Accumulated ep jon 1,2015 an on $12000 $50000 $ 38000

ent Co. Очи tad Yevived e estimated alnge hue to $ 5000 1, 2012, 41 O on was Componie Pamge Hive offet on Awol ihouon opembons As on Jan , 2018 $. 38000 Net beok ualue th fopreiable value af the ya thuck 38000 ended 2018 value (reved)5ees And Entimated Unfl bife Ramoiusiny Deprekin tye 7yearh 2018 epreobleRed valve е Sluoge alue ominigingd Life 5000 7 33000 7

adontment neeeol ^ert Income on Conhinung operakons for YeS 2018 Yes hot PROSPECTIUE Yes. hol i at ameon f adjoriment necded? 3 $714. 29) need be dedoeted fom $S00oico frem Income Canbasing Openhivns Crepoed$5000o 2018 ADD Ropreciobon experme vecded paluage value 000 uNrg old DepTeciobion expene urder Aalvay LESS $474.28 value revined fom Caha sing Openton Cadjorted 9928312 9014 As he ncome from continuing opevahow redueed ih Jdjunbwant reeded which in to be deducted Amoont $714 29

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