Question

For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,592,000. Its useful life was estimated to be six years with a $168,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: ($ in 1000)

Year Straight-Line Declining Balance Difference
2018 $404 $864 $460
2019 404 576 172
2020 404 384 (20)
$1,212 $1,824 $612
Required:
Prepare any 2013 journal entry related to the change.

Answer 1

Dr Accumulated Depreciation $612

Cr Retained Earnings $612

Step-by-step explanation:

Preparation of journal entry related to the change.

Based on the information given the Journa entry related to the change is:

Dr Accumulated Depreciation $612

Cr Retained Earnings $612

($1,212-$1,824)

( To record the change of depreciation methods)