For financial reporting, Clinton Poultry Farms has used the declining-balance me

Question

For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2013 for $2,864,000. Its useful life was estimated to be six years with a $236,000 residual value. At the beginning of 2016, 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) Year Straight-Line Declining Balance Difference 2013 2014 2015 S 438 438 438 S 954 636 425 $516 198 (13) $701 $1,314 $2,015 Required: 2. Prepare any 2016 journal entry related to the change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the adjusting entry for depreciation in 2016. Note: Enter debits before credits. Event General Journal Debit Credit ion expense Accumulated depreciation Record entry Clear entry View general journal

Explanation / Answer

No journal entry is required for change. Adjusting entry for depreciation will be: Depreciation expense 204333 =(2864000-2015000-236000)/3         Accumulated depreciation 204333

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