Indicate How Each Event Affects the Financial Statements

Essay

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter dollar amounts.Increase = I Decrease = D Not Affected = NAAn asset purchased for $24,000 with a $6,000 salvage value and a 5-year life has been depreciated using the straight-line method for two years. At the beginning of Year 3, the useful life of the asset was revised to 4 years with no change in salvage value. Show how the revision of depreciation expense in the third year of the asset's life will affect the financial statements in year 3 (compared to the financial statements if the revision in estimate had not been made).