At December 31, 2014, Tyler Corporation decided to change the depreciation method on its office...

Question

At December 31, 2014, Tyler Corporation decided to change the depreciation method on its office equipment from double-declining to straight-line. The equipment had an original cost of $500,000 when purchased on January 1, 2012. It has a 10-year useful life and no salvage value. Tyler properly recorded depreciation using the double-declining-balance method for 2012 and 2013. Tyler had already recorded 2014 depreciation expense using the double-declining-balance method when they decided to change to the straight-line method.  Is this a change in accounting principle, a change in accounting estimate or an error in the financial statement?  What is the proper accounting treatment for this situation? Cite the authoritative guidance.  What journal entry would be appropriate at 12/31/2014? Ignore tax implications.

Robert · Accepted Answer

A change in method of depreciation is a change in accounting principle. 
Accounting treatment as per ASC 250 
Changes in accounting principles should generally be presented by recasting all prior periods 
presented to reflect the direct effects of the new method of accounting, with the cumulative effect 
of the new method of accounting  
Journal entry 
Accumulated depreciation account …..

At December 31, 2014, Tyler Corporation decided to change the depreciation method on its office equipment from double-declining to straight-line. The equipment had an original cost of $500,000 when...

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