For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2015 for $2,848,000. Its useful life was estimated to be six years with a $232,000 residual value. At the beginning of 2018, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows ($ in 000s): Year Straight-Line Declining Balance Difference
2013 $438 $954 $516
2014 438 636 198
2015 438 425 (13)
$1,314 $2,015 $701

Required:
Prepare any 2016 journal entry related to the change.

Answer and Explanation:

The journal entry is given below:

But before that the depreciation expense is

Cost of the asset $2,848,000

Less: accumulate depreciation -$2,015,000

Non-depreciable cost $833,000

Less: residual value -$232,000

Remaining value $601,000

Divided by 3 years

Depreciation expense $200,333.33

Now the journal entry is

Depreciation expense Dr $200,333.33

        To Accumulated depreciation $200,333.33

(Being deprecation expense is recorded)

Here the depreciation expense is debited as it increased the asset and credited the accumulated depreciation as it decreased the asset

answer; communication channel;

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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