Answer:
From a general point of view,voluntary changes in accounting principles are reported retrospectively.However,a change in depreciation method is considered a change in accounting estimate emanating from change in accounting principle.That is to say a change in accounting method reflects a change in:
1. Estimated future economic benefits
2.The company's knowledge about those benefits
3.The pattern of receiving those benefits
As a result of the points above,the change should recorded be prospectively by employing straight method from now on.
The remaining depreciable amount of the asset is depreciated on straight line basis over the remaining useful live.
A disclosure should be used to justify the change,as well as the effect on financial statements line items and impact on equity.
$
Asset's cost $2,560,000
Accumulated depreciation till date -$1801000
Remaining depreciable amount $759,000
Estimated residual value -$160000
Depreciated over 3 years $599,000
Annual straight line method depreciation $199,666.67
Adjusting entries
DR Depreciation expense $199,666.67
CR Accummulated depreciation $199,666.67
Explanation:
According golden rule of double entry,which says that the giving account be credit while the receiving account ,as result the expense account is debited and the accumulated depreciation is credited
