Problem
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $5,000. The cost of the building was $100,000. The current book value of the equipment (January 1, 2013) is $85,000. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2013, the company decided to reduce the original useful life by 25% and to establish a salvage value of $5,000. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects.
Required:
1. Record the journal entry, if any, to report the accounting change.
2. Record the annual depreciation for 2013.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.