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During 2022 and 2023, Faulkner Manufacturing used the sum-of-the-years'-digits (SYD) method of depreciation for its...

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Accounting

During 2022 and 2023, Faulkner Manufacturing used the sum-of-the-years'-digits (SYD) method of depreciation for its depreciable assets, for both financial reporting and tax purposes. At the beginning of 2024, Faulkner decided to change to the straight-line method for both financial reporting and tax purposes. A tax rate of 25% is in effect for all years.

For an asset that cost $17,200 with an estimated residual value of $1,200 and an estimated useful life of 10 years, the depreciation under different method is as follows:

Year Straight-line SYD Difference
2022 $1,600 $2,909 $1,309
2023 1,600 2,618 1,018
$3,200 $5,527 $2,327

Required:

1. Prepare the journal entry that Faulkner will record in 2024 related to the change.

2. Suppose instead that Faulkner previously used straight-line depreciation and changed to sum-of-the-years'-digits in 2024. Prepare the journal entry that Faulkner will record in 2024 related to the change.

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