Weaver Textiles Inc. has used the straight-line method to depreciate its equipment since it started business...
Weaver Textiles Inc.
has used the straight-line method to depreciate its equipment since
it started business in 2014. At the beginning of 2018, the company
decided to change to the double-declining-balance (DDB) method.
Depreciation as reported and as it would have been reported if the
company had always used DDB is listed below:
| Year | Straight-Line | DDB | |||||
| 2014 | $ | 22,500 | $ | 45,000 | |||
| 2015 | 25,000 | 40,000 | |||||
| 2016 | 28,000 | 38,000 | |||||
| 2017 | 28,000 | 32,000 | |||||
Required:
What journal entry, if any, should Weaver make to record the effect
of the accounting change
Homework Answers
|
Answer - No Entry The change in depreciation is treated prospectively, just like the way we treat change in accounting estimate..Thus, no entry is required to record the effect of the accounting change.However the depreciation expense for year 2018 and onward will be recorded by applying the double declining method to the remaining depreciable basis of the assets. |
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Weaver Textiles Inc.
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