Question

Ch20 Homework i Hel Saved 2 Irwin, Inc., constructed a machine at a total cost of $57 million. Construction was completed at the end of 2014 and the machine was placed in service at the beginning of 2015. The machine was being depreciated over a 10-year life using the sum-of-the-years'-digits method. The residual value is expected to be $2 million. At the beginning of 2018, Irwin decided to change to the straight-line method. 16.66 gnoring income taxes, prepare the journal entry relating to the machine for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) points eBook View transaction list Print Journal entry worksheet References Record the entry relating to the machine for 2018. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Event	General Journal	Debit	Credit
1	Depreciation expense	4.0
	Accumulated depreciation - Machine		4.0
	(To record Depreciation expense for the year 2018.)

Amount of Dollars expressed in millions.
Useful life	10 years
Sum of 1 to 10 (1+2+3+…+8+9+10)	55
Cost of Machine	$                57
Less: Salvage Value	$                  2
Depreciable Cost	$                55
Divided by: Sum of digit 1 to 10	55
Depreciation per 1 digit	$                  1
Cost of Machine	$                57
Less: Accumulated Depreciation ((10+9+8)*$1)	$                27
Book Value of Machine at the beginning of 2018	$                30
Now company should not report any change in value. Here, Company should use the straight-line method for the remaining 7 years. (10-3 =7)
Book Value of Machine at the beginning of 2018	$                30
Less: Salvage Value	$                  2
Depreciable Cost	$                28
Divided by: remaining useful life	7
Annual depreciation expense for the remaining 7 years	$                  4

Type of Change

Change in accounting principle (result in to Change in Estimate)