Depreciation calculation

Context

Imprimerie Lumen (a fictitious company) operates an offset press acquired on 1 January 20X1 for 900,000, depreciated on a straight-line basis over 10 years with a residual value of 50,000. It applies the cost model and its reporting date is 31 December. At the start of 20X4, the arrival of more efficient digital presses leads management to review its estimates. The financial controller passes you the file with several proposals.

Assignment

'Depreciation calculation' workpaper: schedule revised prospectively.

Purpose of the workpaper

Calculate the charge for the period under the method retained (straight-line with time apportionment, diminishing balance, units of production or by component) from the basis, the residual value and the remaining useful life, then the closing carrying amount. Only the method retained is filled in; the entry and the impact on the financial statements follow from it.

Questions of the file covered by this workpaper

• Calculate the carrying amount of the press at 1 January 20X4.
• Calculate the revised 20X4 charge and the effect of the change in estimate on the period.
• What journal entry do you record for the 20X4 depreciation?
• What is the impact on the 20X4 financial statements, including the notes?

• ExtractFixed asset record of the pressOpen
• MemoTechnical report of 2 January 20X4Open
• MemoFinancial controller's proposalsOpen
• DocumentInsurance certificateOpen