Canliss Milling Company purchased machinery on January 2, 2009, for $710,000. A

Question

Canliss Milling Company purchased machinery on January 2, 2009, for $710,000. A 4-year life was estimated and no residual value was anticipated. Canliss decided to use the double-declining balance method and recorded depreciation of $355,000 in 2009 and $177,500 in 2010. Early in 2011, the company changed its depreciation method to the straight-line method.

Required:
(1) What type of accounting change is this?

.

(2) Prepare any 2011 journal entry related to the change. (Round your answers to the nearest dollar

General Journal Debit Credit

Explanation / Answer

(1) This is a change in accounting policy

(2)
Straight line depreciation rate = 100%/4 = 25%
Double declining balance depreciation rate = 50%

Carrying amount as at 2009                          710000

Depreciation for 2009 (710000 x 50%)           (355000)

Carrying amount as at 2010                          355000

Depreciation for 2010 (355000 x 50%)           (177500)

Carrying amount as at 2011                           177500

Remaining life = 2 years

Depreciation for 2011 = 177500/2 = $88750

Debit Depreciation $88750

Credit Accumulated Depreciation $88750

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