Baker Co purchased an asset for $1,800,000 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 | 1,800,000 | 720,000 | 1,080,000 |
| X2 | 1,080,000 | 432,000 | 648,000 |
| X3 | 648,000 | 216,000 | 432,000 |
WORKING : Annual depreciation using straight line
=648,000 / 3
=216,000