Baker Co purchased an asset for $1,400,000 on 1.1.X1. It had an estimated useful life of 5 yers and it was depreciated using the reducing balance method at a rate of 40%. On 1.1.X3 it was decided to change the method to straight line.
What is the carrying amount of the asset at 31.12.X3?
SUGGESTED SOLUTIONS:
| YEAR | COST | ANNUAL DEPRECIATION | CARRYING AMOUNT |
| X1 | 1,400,000 | 560,000 | 840,000 |
| X2 | 840,000 | 336,000 | 504,000 |
| X3 | 504,000 | 168,000 | 336,000 |
WORKING : Annual depreciation using straight line
=504,000 / 3
=168,000