Gonzaga Company Has Used the Double-Declining-Balance Method for Depreciation Since

question 85

Essay

Gonzaga Company has used the double-declining-balance method for depreciation since it started business in 2005. At the beginning of 2009, the company decided to change to the straight-line method. Depreciation as reported and what it would have been reported if the company had always used straight-line is listed below:
Required:
What journal entry, if any, should Gonzaga make to record the effect of the accounting change (ignore income taxes)? Explain.
$\begin{array}{rrr}\text { Year }& \text { Straight-Line } & \text { DDB } \\2005 & \$ 32,000 & \$ 55,000 \\2006 & 35,000 & 50,000 \\2007 & 39,000 & 58,000 \\2008 & 39,000 & 48,000\end{array}$

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Definitions:

Journalize Transactions

The process of recording financial transactions in a company's journal, marking the first step in the accounting cycle.

Credit Card Sales

Transactions where customers purchase goods or services using a credit card as the payment method.

Service Charge Fee

A fee charged by a bank or financial institution for processing transactions or providing a specific service.

Finance Charges

The cost of borrowing money, including interest and other fees.