For financial reporting, Clinton Poultry Farms has used the
declining-balance method of depreciation for conveyor equipment
acquired at the beginning of 2018 for $2,560,000. Its useful life
was estimated to be six years with a $160,000 residual value. At
the beginning of 2021, Clinton decides to change to the
straight-line method. The effect of this change on depreciation for
each year is as follows:
($ in thousands) | |||||||||||||
Year | Straight-Line | Declining Balance | Difference | ||||||||||
2018 | $ | 400 | $ | 853 | $ | 453 | |||||||
2019 | 400 | 569 | 169 | ||||||||||
2020 | 400 | 379 | (21 | ) | |||||||||
$ | 1,200 | $ | 1,801 | $ | 601 | ||||||||
Required:
2. Prepare any 2021 journal entry related to the
change. (Enter your answers in dollars. If
no entry is required for a transaction/event, select "No journal
entry required" in the first account
field.)
Record the adjusting entry for depreciation in 2021.
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