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Dolley Inc. constructed a machine at a total cost of $60 million. Construction was completed at the end of 2007 and the machine was placed in service at the beginning of 2008. The machine was being depreciated over a 10-year life using the sum-of-the-years'-digits method. The residual value will not change from the original $4 million. At the beginning of 2011, Dolley decided to change to the straight-line method.

Required:

1. Ignoring income taxes, what journal entry(s) should Dolley record relating to the machine for 2011?

2. Suppose Green has been using the straight-line method and switches to the sum-of-the-years'-digits method. Ignoring income taxes, what journal entry(s) should Dolley record relating to the machine for 2011?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M955987

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