Review Case 22-10, Researching GAAP, in your text. Prepare a reply to the president that includes the required information presented in the case in response to Situation I, II, or III. Use your readings from the text and at least one additional academic resource to provide support for your response. The websites provided in the module reading and resources may be used along with any other reputable site. Remember to use proper APA-style formatting.
Hyde determined that the depreciable lives of its fixed assets are presently too long to fairly match the cost of the fixed assets with the revenue produced. Hype decided at the beginning of the current year to reduce the depreciable lives of all of its existing fixed assets by 5 years.
On December 31, 2015, Hyde owned 51% of Patten Company, at which time Hyde reported its investment using the cost method, owing to political uncertainties. On January 2, 2016, the management of Hyde was satisfied that the political uncertainties were resolved and the assets of the company were in no danger of nationalization. Accordingly, Hyde will prepare consolidated financial statements for Hyde and Patten for the year ended December 31, 2016.
Hyde decided in January 2016 to adopt the straight-line method of depreciation for equipment.
The straight-line method will be used for new acquisitions, as well as for previously acquired equipment for which depreciation had been provided on an accelerated basis.
For each of the preceding situations,, research the related generally accepted accounting principles and prepare a short memo to the president that explains the following type of accounting change; manner of reporting the change under current generally accepted accounting principles, including a discussion, where applicable, of how amounts are computed: effect of the change on the balance sheet and income statement: and note disclosures that would be necessary. Cite references and applicable paragraph numbers.