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During 2019 and 2020, Faulkner Manufacturing used the sum-of-the-years’-digits (SYD) method of
For an asset that cost $11,200 with an estimated residual value of $1,200 and an estimated useful life of 10 years, the depreciation under different methods is as follows:
Year | Straight Line | SYD | Difference | ||||||||
2019 | $ | 1,000 | $ | 1,818 | $ | 818 | |||||
2020 | 1,000 | 1,636 | 636 | ||||||||
$ | 2,000 | $ | 3,454 | $ | 1,454 | ||||||
Required:
1. Prepare the
2. Suppose instead that Faulkner previously used straight-line depreciation and changed to sum-of-the-years’- digits in 2021. Prepare the journal entry that Faulkner will record in 2021 related to the change.
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