f depreciation for conveyor equipment acquired For financial r at the beginning

Question

f depreciation for conveyor equipment acquired For financial r at the beginning of 2015 for $2,864,000. Its useful life was estimated to be six years with a $236,000 residual value. At the beginning of 2018, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows (S in 000s) $ 438 438 438 954 636 425 $2,015 $516 198 (13) 701 2017 $1,314 Required: 2. Prepare any 2018 journal entry related to the change. (Enter your answers in dollers rounded to the nearest thousand. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet

Explanation / Answer

Depreciation charged under declining balance method = $2,015,000

Depreciation that would have been charged under SLM = $1,314,000

Excess depreciation charged till end of 2017 = $701,000

This excess amount shall be reduced from Accumulated Depreciation Account and shall be transferred to Retained Earnings Account.

Depreciation expense to be charged in 2018 under SLM = $438,000

JOURNAL -

1. Adjusting entry for depreciation in 2018 -

Depreciation Expense $438,000 (DEBIT)

Accumulated Depreciation $438,000 (CREDIT)

(Depreciation expense for 2018 recorded)

2. 2018 journal entry related to the change -

Accumulated Depreciation $701,000 (DEBIT)

Retained Earnings $701,000 (CREDIT)

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