Question

Tedesco Company changed depreciation methods in 2017 from double-declining-balance to straight-line. Depreciation prior to 2017 under double-declining-balance was \(90,000, whereas straight-line depreciation prior to 2017 would have been \)50,000. Tedesco’s depreciable assets had a cost of \(250,000 with a \)40,000 salvage value, and an 8-year remaining useful life at the beginning of 2017. Prepare the 2017 journal entries, if any, related to Tedesco’s depreciable assets

Short answer

Depreciation expense is calculated as $15,000. Depreciation expense is debited by $15,000, and accumulated depreciation is credited by $15,000.

Step-by-step solution

Calculation of depreciation

$$\begin{gathered} Depreciablebase=Cost-Accumulateddepreciation-Salvagevalue \\ =250,000-90,000-40,000 \\ =\$120,000 \\ Depreciationin2017=\frac{Depreciable\cos t}{Numberofyears} \\ =\frac{120,000}{8} \\ =\$15,000 \end{gathered}$$

Journal Entry

Date	Particulars	Debit ($)	Credit ($)
2017	Depreciation Expense	15,000
	Accumulated Depreciation		15,000
	(Being depreciation expense recorded)