Venice Company purchased a gondola for $440,000 (no residual value) at the beginning of 2015. The gondola was being depreciated over a 10-year life using the sum-of-the-years'-digits method. At the beginning of 2018, it was decided to change to straight-line. Ignoring taxes, the 2018 adjusting entry will include a debit to depreciation expense of:
A) $76,000
B) $44,000
C) $32,000
D) $22,000

Question

Quizplus · Accepted Answer

Sum-of the years' digits depreciation was $216,000 {$440,000 × [(10 + 9 + 8)/55]}. Thus, the undepreciated value at the beginning of 2018 is $224,000 ($440,000 - 216,000), which will be depreciated over seven years.

Venice Company Purchased a Gondola for $440,000 (No Residual Value)