If a change is made from straight-line to units-of-production depreciation, one should record the effects of a journal entry including:
Multiple Choice: Pick One
A credit to deferred tax liability.
A credit to accumulated depreciation.
A debit to depreciation expense.
No journal entry is required.
Answer: No journal entry is required.
Reason: Change in Depreciation method is a change in Accounting Estimates. As per IAS 8, Change is Accounting Estimates relating to change in depreciation method has to be accounted for prospectively.
Hence no journal entry is required to sepecifically record the change.
The journal entry post change in Depreciation Method would be:
Debit Depreciation expense
Credit Accumulated Depreciation
With Amount: Depreciation Amount using Unit of Production Method prospectively.
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