Albatross Company purchased a piece of machinery for $45,000 on January 1, 2014,

Question

Albatross Company purchased a piece of machinery for $45,000 on January 1, 2014, and has been depreciating the machine using the sum-of-the-years'-digits method based on a five-year estimated useful life and no salvage value. On January 1, 2016, Albatross decided to switch to the straight-line method of depreciation. The salvage value is still zero and the estimated useful life did not change. Ignore income taxes.

Prepare the appropriate journal entry, if any, to record the accounting change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare the journal entry to record depreciation for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Albatross Company purchased a piece of machinery for $45,000 on January 1, 2014, and has been depreciating the machine using the sum-of-the-years'-digits method based on a five-year estimated useful life and no salvage value. On January 1, 2016, Albatross decided to switch to the straight-line method of depreciation. The salvage value is still zero and the estimated useful life did not change. Ignore income taxes.

Explanation / Answer

a No journal entry required for accounting change. b Accumulated depreciation till Jan 2016 = 45000/15*9= 27000 Book value on jan 1 2016 = 45000-27000 = 18000 Depreciation expense 6000 =18000/3         Accumulated depreciation 6000

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