# Alteran Corporation purchased office equipment for \$1.5 million in 2013. The equipment is being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be \$300,000. At the beginning of 2016, Alteran decided to change to the straight-line depreciation method for this equipment. Required: Prepare the 2016 depreciation adjusting entry.

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Alteran Corporation purchased office equipment for \$1.5 million in 2013. The equipment is being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be \$300,000. At the beginning of 2016, Alteran decided to change to the straight-line depreciation method for this equipment. Required: Prepare the 2016 depreciation adjusting entry.

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Step 1

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Step 2

Sum of the years’ digits method (SYD Method):

Sum-of-the years’ digits method determines the depreciation expense by multiplying the depreciable base and declining fraction.

Step 3

Prepare the journal entry to record depr...

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