For financial reporting, Clinton Poultry rarms nas used the declining-palance metnoa or depreciation for conveyor equipment acquirea at the beginning of 2021 for $2,560,000. Its useful life was estimated to be six years, with a $160,000 residual value. At the beginning of 2024, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year 2021 2022 2023 ($ in thousands) Declining Balance Straight Line $ 400 400 400 $ 1,200 $ 853 569 379 $ 1,801 Difference $ 453 169 (21) $ 601 Required: 2. Prepare any 2024 journal entry related to the change. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollars.

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.