Question
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,672,000. Its
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $2,672,000. Its useful life was estimated to be six years with a $188,000 residual value. At the beginning of 2021, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows:
($ in thousands) | |||||||||||||
Year | Straight-Line | Declining Balance | Difference | ||||||||||
2018 | $ | 414 | $ | 890 | $ | 476 | |||||||
2019 | 414 | 594 | 180 | ||||||||||
2020 | 414 | 396 | (18 | ) | |||||||||
$ | 1,242 | $ | 1,880 | $ | 638 | ||||||||
Required: 2. Prepare any 2021 journal entry related to the change. (Enter your answers in dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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