Brief Exercise 20-4 Change in depreciation methods [LO20-3] Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2016, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
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working | ||
Cost of Asset | 57 | |
Less: Accumulated Depreciation till date | 27 | |
(10+9+8) - 3 Years Sum of Year Digit method | ||
Remaining Cost | 30 | |
Less: Residual Value | 2 | |
Remaining Depreciable Value | 28 | |
Remaining Life 10-3 | 7 Year | |
Annual Depreciation-Straight Line 28/7 | 4 | |
Account | Debit | Credit |
Depreciation | 4 | |
Accumulated Depreciation | 4 |
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