Declining-balance method of depreciation-conveyor equipment

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Reference no: EM13747733

For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2010 for $2,560,000. Its useful life was estimated to be six years with a $160,000 residual value. At the beginning of 2013, Clinton decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows ($ in 000s):

YEAR               Straight-line                    Declining Balance                           Difference

2010                   $400                              $853                                                 $453

2011                    400                                 569                                                   169

2012                    400                                 379                                                   (21)

Total                     $1,200                            $1,801                                               $601

REQUIRED

1. Briefly describe the way Clinton should report this accounting change in the 2012–2013 comparative financial statements.

2. Prepare any 2013 journal entry related to the change.

Reference no: EM13747733

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