Green Co. constructed a machine at a total cost of $76.50 million. Construction

Question

Green Co. constructed a machine at a total cost of $76.50 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the sum-of-the-years'-digits method. The residual value is expected to be $4.50 million. At the beginning of 2016, Green decided to change to the straight-line method. Ignoring income taxes, what journal entry(s) should Green record relating to the machine for 2016? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)

Explanation / Answer

Amt $ Million Machine cost                     76.50 Residual value                          4.50 Depreciable value                     72.00 Useful life                       10.00 years Sum of digit=1+2+3+4+5+6+7+8+9+10                     55.00 Depreciation calculation Year Rate of depreciation=Remaining useful life / Depreciation Amt $ million charged on $72 million remaining depreciable Value $ million               2,013.00 18.18%               13.09          58.91               2,014.00 16.36%               11.78          60.22               2,015.00 14.55%               10.47          61.53 The remaining depreciable value at the end of 2015=                     61.53 Remaining Years                              7 SL depreciation per year=                        8.79 As depreciation change will be on prospective basis , the JV entry in 2016 will be '; Account Title Dr $ Million Cr $ million Depreciation Expense                        8.79 Accumulated Depreciation                    8.79

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