E22-12 (Change in Estimate?Depreciation) Gerald Englehart Industries changed from the doublede clining balance to the straight-line method in 2008 on all its plant assets. There was no change in the assets' salvage values or useful lives. Plant assets, acquired on January 2, 2005, had an original cost of
$1,600,000, with a $100,000 salvage value and an 8-year estimated useful life. Income before depreciation expense was $270,000 in 2007 and $300,000 in 2008.
(a) Prepare the journal entry(ies) to record the change in depreciation method in 2008.
(b) Starting with income before depreciation expense, prepare the remaining portion of the income-statement for 2007 and 2008
Solution is provided in a separate excel file attached as follows.
1 Calculation of Rate of deprecition under Straight line Method
2 Calculation of rate of Depreciation under Double Declining Balance Metod:
3 Amount of depreciation Expense recognized for previous 3 ...
The change in estimation and depreciation is examined. The expert prepares journal entries.