In December 2020, the auditors of BB Jams Ltd. has found the following items that might have an effect on previous years:

1. BB purchased equipment on January 2^nd.,2017, for $130,000. At that time the equipment had an estimated useful life of 10 years, with $10,000 residual value. The equipment is depreciated on a straight-line basis. On January 2^nd.2020, as a result of additional information, the company determined that the equipment had a total useful life of seven years with a $6,000 residual value.

2. During 2020, BB changed from the double declining balance fo its building to the straight line method because the company thinks the straight-line method now more closely follows the benefits received from using the assets. The current year depreciation was correctly calculated using the new method following straight-line depreciation. In case the following information was needed, the auditor provided calculations that present depreciation on both bases. The building had originally cost $1.2 million when purchased at the beginning of 2020, and has a residual value of $120,000. It is depreciated over 20 years. The original estimates of useful life and residual value are still accurate.

2020.20192018

Straight-line.$54,000$54,000.$54,000

Double declining balance..$97,200$108,000$120,000

3. BB purchased a machine on July 1^st.2017, at a cost of $160,000. The machine has a residual value of $16,000 and a useful life of eight years. BBs book-keeper recorded straight-line depreciating during each year but failed to consider the residual value.

Required:

(i) Prepare the necessary journal entries to record each of the changes or errors. The books for the year have not been closed(8 marks)

(ii) Calculate the 2020 depreciation expense on the equipment in item(i) above (5 marks)