Monroe, Inc. purchased a building on January 1, 2010. The building cost $2,600,000 ad had an estimated salvage value of $200,000. As of January 1, 2020, Monroe estimated the useful life of the building to be 30 years. The building is depreciated using the straight-line method.

On January 1, 2020, Monroe, Inc. determined the building to have a remaining useful life of 15 years and an estimated salvage value of $300,000.

Instructions:

1. What type of accounting change does this represent by placing an X in the space provided. Mark all that apply.

____Change in accounting principle.

____Change in accounting estimate.

____Change in reporting entity.

____Correction of an error.

2. Indicate how this accounting change will be reported by placing an X in the space provided. Mark all that apply.

____Report the change currently

____Report the change retroactively

____Report the change prospectively

3. Prepare the journal entry(ies) necessary to record the depreciation expense on the building in 2020. Include supporting calculations for the journal entry.