The Canliss Milling Company purchased machinery on January 2, 2014, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2014 and 2015. Early in 2016, the company changed its depreciation method to the sum-of-the-years’-digits (SYD) method. Required: 1. Briefly describe the way Canliss should report this accounting change in the 2015–2016 comparative financial statements. 2. Prepare any 2016 journal entry related to the change.
The Canliss Milling Company purchased machinery on January 2, 2014, for $800,000. A five-year life was estimated and no residual value was anticipated. Canliss decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2014 and 2015. Early in 2016, the company changed its depreciation method to the sum-of-the-years’-digits (SYD) method. Required: 1. Briefly describe the way Canliss should report this accounting change in the 2015–2016 comparative financial statements. 2. Prepare any 2016 journal entry related to the change.
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