During 2014 and 2015, Faulkner Manufacturing used the sum-of-the-years-digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2016, Faulkner decided to change to the straight-line method for both financial reporting and tax purposes. A tax rate of 40% is in effect for all years. For an asset that cost $25,100 with an estimated residual value of $1,100 and an estimated useful life of 10 years, the depreciation under different methods is as follows:

Year Straight Line SYD Difference

2014 $2,400 $4,364 $1,964

2015 2,400 3,927 1,527

Totals $4,800 $8,291 $3,491

Required: 1. Prepare the journal entry that Faulkner will record in 2016 related to the change.

Record the 2016 depreciation adjusting entry.

2. Suppose instead that Faulkner previously used straight-line depreciation and changed to sum-of-the-years- digits in 2016. Prepare the journal entry that Faulkner will record in 2016 related to the change.

Record the 2016 depreciation adjusting entry.