A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes. The entry to record this change should include a debit to retained earnings i nthe amount of the difference on prior years?

debit to deferred tax asset

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No, the entry to record the change from straight-line to an accelerated method of calculating depreciation should not include a debit to retained earnings for the difference on prior years.

When a company changes its depreciation method, it is considered a change in accounting estimate rather than a correction of an error. As a result, the difference in prior years' depreciation expense is not retroactively adjusted. Instead, the change is applied prospectively from the date of the change.

The entry to record the change in depreciation method typically includes the following steps:

1. Adjust the carrying amount of the assets affected: Debit or credit the accumulated depreciation account for the assets that will be affected by the change. This adjustment is made to bring the carrying amount of the assets to their new depreciable basis.

2. Adjust the depreciation expense: Debit or credit the depreciation expense account to reflect the change in depreciation method. This adjustment is typically made to align the future depreciation expense with the new method.

3. Record any tax effects: Depending on the tax regulations and the method used for tax purposes, additional entries may be required to reflect the tax effects of the change in depreciation method.

It is important to consult with accounting professionals or refer to accounting standards applicable in your jurisdiction for specific guidance on recording changes in depreciation methods.

To record the change from straight-line to the accelerated method of calculating depreciation, the entry should include a debit to accumulated depreciation for the difference in prior years. This means that the accumulated depreciation under the straight-line method will be adjusted to match the accelerated method.

The entry can be broken down into two parts:

1. Debit Accumulated Depreciation: Increase the accumulated depreciation account by the difference in prior years. This adjustment will align the accumulated depreciation balance with the accelerated method.

2. Credit Retained Earnings: Decrease retained earnings by the same amount as the debit made to accumulated depreciation. This reflects the reduction in the company's overall net income from the prior years due to the change in depreciation method.

It's important to note that this change only affects prior years' financial statements. Current and future depreciation expense will be calculated using the new accelerated method.

To determine the exact amount of the difference on prior years, you need to compare the total accumulated depreciation under the straight-line method to the total accumulated depreciation that would have been recognized using the accelerated method. This calculation can be done by using the historical asset records and applying the respective depreciation rates for each method.

If you need specific amounts or details for your company's financials, consider consulting with a professional accountant or referring to the relevant financial statements and supporting records.