Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,300. The cost of the building was $86,000. The current book value of the equipment (January 1, 2018) is $73,100. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2018, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,300. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects.   Required: 1. Prepare the journal entry, if any, to report the accounting change under GAAP. 2. Record the annual depreciation for 2018.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,300. The cost of the building was $86,000. The current book value of the equipment (January 1, 2018) is $73,100. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2018, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,300. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects.
 
Required:
1. Prepare the journal entry, if any, to report the accounting change under GAAP.
2. Record the annual depreciation for 2018.

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