For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,800,000. Its useful life was estimated to be six years with a $220,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year 2821 2822 2823 ($ in thousands) Declining Straight- Line Balance $933 $ 430 430 622 430 415 $ 1,290 $ 1,970 View transaction list Required: 2. Prepare any 2024 Journal entry related to the change. Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Journal entry worksheet Difference $ 503 192 (15) Note: Enter debits before credits. Record the adjusting entry for depreciation in 2024. Event 1 $ 680 Record entry General Journal Clear entry Debit Credit View general Journal
For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,800,000. Its useful life was estimated to be six years with a $220,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year 2821 2822 2823 ($ in thousands) Declining Straight- Line Balance $933 $ 430 430 622 430 415 $ 1,290 $ 1,970 View transaction list Required: 2. Prepare any 2024 Journal entry related to the change. Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. Journal entry worksheet Difference $ 503 192 (15) Note: Enter debits before credits. Record the adjusting entry for depreciation in 2024. Event 1 $ 680 Record entry General Journal Clear entry Debit Credit View general Journal
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 5MC: During 2019, White Company determined that machinery previously depreciated over a 7-year life had a...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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