Final answer:
To handle Blossom Company's change in depreciation method from double-declining balance to straight-line, we computed the book value of assets at the beginning of 2025 and calculated the new annual straight-line depreciation. The journal entry for 2025 records a $15,700 depreciation expense.
Step-by-step explanation:
The student's question relates to the accounting treatment of a change in depreciation method for Blossom Company's depreciable assets in the year 2025. When a company changes its depreciation method, it has to compute the new depreciation expense based on the new method from the point of change forward, without retroactively adjusting prior years' depreciation.
First, we need to calculate the book value of the assets at the beginning of 2025 by subtracting the accumulated depreciation under the double-declining balance method from the cost of the depreciable assets:
- Book Value = Cost of Assets - Accumulated Depreciation
- Book Value = $257,400 - $89,400
- Book Value = $168,000
Next, we will calculate the annual straight-line depreciation expense for the remaining useful life of the assets:
- Annual Straight-Line Depreciation = (Book Value - Salvage Value) / Remaining Useful Life
- Annual Straight-Line Depreciation = ($168,000 - $42,400) / 8 Years
- Annual Straight-Line Depreciation = $15,700
The journal entry to record the depreciation expense for the year 2025 under the straight-line method would be:
- Debit Depreciation Expense: $15,700
- Credit Accumulated Depreciation: $15,700