Tracy Ltd. purchased a piece of equipment on January 1, 2013 for $1.2 million. At that time, it was estimated that the machine would have a 15-year life and no residual value. On December 31, 2017, Tracy's controller found that the entry for depreciation expense was omitted in error in 2014. In addition, Tracy planned to switch to double-declining-balance depreciation because of a change in the pattern of benefits received, starting with the year 2017. Tracy currently uses the straight-line method for depreciating equipment.
Instructions
(a) Prepare the general journal entries, if any, the accountant should make at December 31, 2017. Ignore income tax effects.
(b) Assume the same information as above, but factor in tax effects. The company has a 25% tax rate for 2013 to 2017.