For each of the following items, indicate the type of accounting change and how each is recognized in the accounting records in the current year.

(a) Change from straight-line method of depreciation to sum-of-the-years'-digits

(b) Change from the cash basis to accrual basis of accounting

(c) Change from cost-recovery to percentage-of-completion method on construction contracts.

(d) Change due to failure to record depreciation in a previous period

(e) Change in the realizability of certain receivables

(f) Change from average cost to FIFO method for inventory valuation purposes.

a. What number belts would maximize total revenue of the sellers?

On January 1, 2007, Powell Company purchased a building and machinery that have the following useful lives, residual value, and costs. Building, 25-year estimated useful life, $4,000,000 cost, $400,000 residual value Machinery, 10-year estimated useful life, $500,000 cost, no residual value The building has been depreciated under the straight-line method through 2011. In 2012, the company decided to switch to the double-declining balance method of depreciation for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a residual value of $25,000 at the end of that time. The machinery is depreciated using the straight-line method.

Instructions (a) Prepare the journal entry necessary to record the depreciation expense on the building in 2012. (b) Compute depreciation expense on the machinery for 2012.