Question

Riverbed Company changed depreciation methods in 2017 from double-declining-balance to straight-line. Depreciation prior to 2017 under double-declining-balance was $82,300, whereas straight-line depreciation prior to 2017 would have been $45,800. Riverbed’s depreciable assets had a cost of $252,700 with a $43,200 salvage value, and an 8-year remaining useful life at the beginning of 2017.

Prepare the 2017 journal entry related to Riverbed’s depreciable assets (Equipment). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Answer 1

Account Titles and Explanation	Debit	Credit
Depreciation expense	15900
Accumulated depreciation-Equipment		15900

A change in an accounting method is a change in an accounting estimate due to a change in an accounting principle and is hence accounted for prospectively.

Cost of depreciable assets	252700
Less: Accumulated depreciation up to 2017	82300
Carrying value at January 1, 2017	170400
Less: Salvage value	43200
Depreciable value at January 1, 2017	127200
Depreciation for 2017 ($127200/8 years)	15900