A company purchased machinery on January 2, Year 1, for $1,000,000. A five-year life was estimated and no residual value was anticipated. The company decided to use the straight-line depreciation method and recorded $200,000 in depreciation in Year 1 and Year 2. Early in Year 3, the company changed its depreciation method to the sum-of-the-years-digits (SYD) method.

Required:

1. Will the company apply the SYD method retrospectively or apply the method prospectively?
2. Prepare any Year 3 journal entry related to the change.