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Question - Annual depreciation expense on a building purchased by Atlas Inc. a few years ago (using the straight-line method) is $10,000. The cost of the building was $200,000. The current book value of the equipment (January 1, 2013) is $170,000. 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 $10,000. 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.
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