Question

Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. 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 2018, Irwin decided to change to the straight-line method.

Ignoring income taxes, prepare the journal entry relating to the machine for 2018. (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).)
  

Answer 1

		(figure in million)
Date	Accounts Titles and Explanation	Debit	Credit
	Depreciation Expenses	$5.60
	Accumulated Depreciation		$5.60
Working
	Asset’s cost	$79.00
	Accumulated depreciation to date	$37.80
	($79-$2)x27/55
	Undepreciated cost, Jan. 1, 2018	$41.20
	Estimated residual value	$2.00
	To be depreciated over the remaining 7 years	$39.20
		7	Years
	Annual straight-line depreciation 2018-2024	5.60