Respuesta :
Answer:
Debit Depreciation expense for $263,667
Credit Accumulated depreciation for $263,667
Explanation:
Note: There are some inconsistencies in the dates used in the question. These are therefore corrected before answering the question by presenting the complete question with the correct dates as follows:
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,816,000. Its useful life was estimated to be six years with a $224,000 residual value. At the beginning of 2021, Clinton decided to change to the straight-line method. The effect of this change on depreciation for each year is as follows:
Year Straight-Line Declining Balance Difference
2018 $400 $853 $453
2019 400 569 169
2020 400 379 (21)
$1,200 $1,801 $601
Required:
Prepare any 2021 journal entry related to the change.
The explanation of the answer is now given as follows:
Before preparing the related journal entry, the annual straight-line depreciation for remaining 3 years is first calculated:
Details Amount ($)
Asset’s cost at the beginning (given) 2,816,000
Accumulated depreciation to date (1,801,000)
Undepreciated cost 1,015,000
Estimated residual value (224,000)
To be depreciated over remaining 3 years 791,000
Annual straight-line depreciation for remaining 3 years = $791,000/ 3 = $263,667
The 2021 journal entry related to the change will look as follows:
Account title Debit ($) Credit ($)
Depreciation expense 263,667
To Accumulated depreciation 263,667
(To record 2021 depreciation expense.)
