Ask Question
21 July, 20:37

For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2013 for $2,784,000. Its useful life was estimated to be six years with a $216,000 residual value. At the beginning of 2016, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows ($ in 000s):

Year Straight-Line Declining Balance Difference

2013 $ 428 $ 928 $ 500

2014 428 618 190

2015 428 413 (15)

$ 1,284 $ 1,959 $ 675

Required:

Prepare any 2016 journal entry related to the change. (Enter your answers in dollars rounded to the nearest thousand. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the adjusting entry for depreciation in 2016.

+1
Answers (1)
  1. 21 July, 22:12
    0
    Answer and Explanation:

    The Journal entry is shown below:-

    No journal entry related to change

    Adjusting entry for depreciation expense will be made at end of December 31,2016

    Working note:-

    Assets cost $2,784,000

    Less:Accumulated depreciation $1,959,000

    Book value as on Jan 1,2016 $825,000

    less : Estimated residual value $216,000

    Depreciated over the remaining

    3 years $609,000

    Depreciation expense

    under straight line $203,000

    ($203,000 : 3)

    Depreciation expense $203,000

    To Accumulated depreciation equipment $203,000

    (Being depreciation expense is recorded)

    Therefore for recording the depreciation we simply debited the depreciation expense and credited the accumulated depreciation equipment.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers