Change in Estimate

Change in Estimate

Financial Statements Presented below are the comparative income statements for Pannebecker Inc. for the years 2009 and 2010. The following additional information is provided:
1. In 2010, Pannebecker Inc. decided to switch its depreciation method from sum-of-the-years’-digits to the straight-line method. The assets were purchased at the beginning of 2009 for $90,000 with an estimated useful life of 4 years and no salvage value.

Change in Estimate

(The 2010 income statement contains depreciation expense of $27,000 on the assets purchased at the beginning of 2009.)
2. In 2010, the company discovered that the ending inventory for 2009 was overstated by $20,000; ending inventory for 2010 is correctly stated.
Prepare the revised retained earnings statement for 2009 and 2010, assuming comparative statements. (Ignore incometaxes.)

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