In: Accounting
The Canliss Milling Company purchased machinery on January 2,
2019, for $860,000. A five-year life was estimated and no residual
value was anticipated. Canliss decided to use the straight-line
depreciation method and recorded $172,000 in depreciation in 2019
and 2020. Early in 2021, the company changed its depreciation
method to the sum-of-the-years’-digits (SYD) method.
Required:
2. Prepare any 2021 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.)
journal entry
Record the adjusting entry for depreciation in 2021.
Date | Acounts Titles and Explanation | Debit | Credit |
2021 | Depreciation expense | $258,000 | |
Accumulated depreciation - Machine | $258,000 | ||
(To record Depreciation expense in 2021) | |||
Remaining life = (5
(Useful life) - 2 ) years = 3 Years Change in Depreciation method from straight-line depreciation to sum of year digits sum of year digits = 3 + 2 + 1 = 6 Depreciation in 2021 = (Cost (-) Accumulated Depreciation) x Remaining life / Sum of Digits = ($860,000 (-) $172,000 (-) $172,000 ) x3 / 6 = $516,000 x 3/6 = $258,000 |