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Worked-example setupScope and assumptions
- Linden Peak and every date and amount are fictional and supplied for instruction.
- Scenario A's original useful life and residual value used all information reasonably available at the original reporting dates.
- Scenario B's binding facility-exit plan existed, was reasonably available, and should have been used in the earlier accounting.
- The prospective schedule uses straight-line allocation only to isolate the evidence distinction; a supported method change would require its own future-consumption pattern and preferability evidence.
- Period
- Change date at the beginning of Year 4
- Units
- US dollars and annual periods
- Rounding
- Retain full precision; display dollars with commas and no decimals
Two timelines, one revised schedule
Linden Peak's packaging press has a $36,000 cost and $18,000 accumulated depreciation at the beginning of Year 4. Both scenarios now point to a $3,000 residual value and three remaining years.
Scenario A: later maintenance evidence
The original six-year life and zero residual value used the information reasonably available. During Year 3, maintenance and resale evidence changed the supported remaining life and residual. This is a supplied estimate-change route.
Scenario B: omitted binding exit plan
Before the original statements were prepared, an approved and distributed facility-exit plan limited the press's use. The earlier file omitted that existing fact. This is an error-analysis stop. The same $5,000 prospective arithmetic cannot be used to label it an estimate change.
Compute Scenario A from the change date
$36,000 cost - $18,000 accumulated depreciation = $18,000 carrying amount
$18,000 carrying amount - $3,000 residual = $15,000 remaining amount
$15,000 / 3 remaining years = $5,000 per full year
Prior depreciation remains $18,000. Year 4 recognizes $5,000 because the change affects the current period. A midyear change would apply the supplied time convention rather than defer the whole effect.
Why Scenario B stops
The workbook can recompute the same remaining allocation, but it cannot decide the comparative correction. The team must determine affected earlier periods, materiality, tax, EPS, statements, disclosure, audit, filing, and control responses. A future schedule is not a substitute for that reconstruction.
The example's result is therefore twofold: $5,000 is the supported Scenario A annual expense, and the information timeline—not the numerical result—separates Scenario A from Scenario B.
Quantitative companions
Choose from 2 ways to work with this calculation.
Verified calculation · accounting change error analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- pre earliest period pretax effect
- 0
- pre earliest period tax rate
- 0
- proposed current income correction
- 0
- prospective schedules
- 1 field
Inspect data
{
"packaging_press": {
"carrying_amount_at_change": 18000,
"current_period_fraction": 1,
"remaining_periods": 3,
"reported_current_period_expense": 5000,
"reported_full_period_expense": 5000,
"revised_residual_value": 3000
}
}- reported correction entry balance difference
- 0
- reported iron curtain amount
- 0
- reported opening equity effect
- 0
- reported out of period component
- 0
- reported rollover amount
- 0
- route
- estimate change
Recomputed result
| Measure | Value |
|---|---|
| correction entry balance difference | 0 |
| iron curtain amount | 0 |
| opening equity effect | 0 |
| opening tax effect | 0 |
| out of period component | 0 |
| packaging press current period expense | 5,000 |
| packaging press full period expense | 5,000 |
| packaging press remaining depreciable amount | 15,000 |
| rollover amount | 0 |