Reference no: EM132871753

Question - On December 31, 2020, before the books were closed, the management and accountants of Baker Inc made the following determinations about three depreciable assets:

1. Depreciable asset A was purchased January 1, 2016. It originally cost $800,000 and, for depreciation purposes, the sum-of-the-years'-digits method was originally chosen. The asset was originally expected to be useful for 20 years and have a salvage value of $10,000. In 2020 the decision was made to change the depreciation method from sum-of-the-years'-digits to straight-line, and the estimates relating to useful life and salvage value remained unchanged.

2. Depreciable asset B was purchased January 1, 2016. It originally cost $160,000 and was depreciated on the straight-line method basis. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2020, the decision was made to shorten the total life of this asset so that it had just 4 more years to go and to estimate the salvage value at $5,000.

3. Depreciable asset C was purchased January 1, 2016. The asset's original cost was $120,000, and this amount was entirely expensed in 2016. This particular asset has a 20-year useful life and no salvage value. The straight-line method was used for depreciation.

Additional data:

Income in 2020 before depreciation expense amounted to $400,000

Depreciation expense on assets other than A, B, and C totaled $75,000 in 2020.

Income in 2019 was reported at $380,000

Ignore all income tax effects.

Required - Prepare/all necessary journal entries in 2020 to record these determinations.