The Collins Corporation purchased office equipment at the beginning of 2016 and capitalized a cost of $2,000,000. This cost included the following expenditures:
Purchase price............................... $1,850,000
Freight charges ....................................30,000
Installation charges ..............................20,000
Annual maintenance charge ..................100,000
Total ..........................................$2,000,000
The company estimated an eight-year useful life for the equipment. No residual value is anticipated. The double-declining-balance method was used to determine depreciation expense for 2016 and 2017. In 2018, after the 2017 financial statements were issued, the company decided to switch to the straight-line depreciation method for this equipment. At that time, the company's controller discovered that the original cost of the equipment incorrectly included one year of annual maintenance charges for the equipment.
Required:
1. Ignoring income taxes, prepare the appropriate correcting entry for the equipment capitalization error discovered in 2018.
2. Ignoring income taxes, prepare any 2018 journal entries related to the change in depreciation methods.