Question

Budget Hardware Consultants purchased a building for $490,000 and depreciated it on a? straight-line basis over...

Budget Hardware Consultants purchased a building for $490,000 and depreciated it on a? straight-line basis over a 40?-year period. The estimated residual value is $90,000. After using the building for 15? years, Budget realized that wear and tear on the building would wear it out before 40years and that the estimated residual value should be $80,000. Starting with the 16th? year, Budget began depreciating the building over a revised total life of 35 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. ?

Record debits? first, then credits. Select the explanation on the last line of the journal entry? table.
(Select one of the following to record for debits, credit, and explanation)
a. Accumulated depreciation-building,
b. accumulated depreciation-equipment,
c. building,
d. cash,
e. depreciation expense-building,
f. depreciation expense-equipment,
g. equipment,
h. to record depreciation on building,
i. to record depreciation on equipment,
j. to record sale of equipment.


Homework Answers

Answer #1
Date General Journal Debit Credit
Year 15 Depreciation expense-building 10000
Accumulated depreciation-building 10000
To record depreciation on building)
Year 16 Depreciation expense-building 13000
Accumulated depreciation-building 13000
To record depreciation on building)

Note: The change in estimated useful life and residual value are change in accounting estimates and hence accounted for propectively.

Working:

Depreciable value = $490000 - $90000 = $400000

Annual depreciation = $400000/40 years = $10000

Accumulated depreciation at the end of Year 15 = $10000 x 15 = $150000

Carrying value at the end of year 15 = $490000 - $150000 = $340000

Revised Depreciable value = $340000 - $80000 = $260000

Revised remaining estimated useful life = 35 - 15 = 20 years

Revised annual depreciation = $260000/20 years = $13000

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ABC Corp. has been depreciating its production equipment on straight-line basis over 10 years, taking a...
ABC Corp. has been depreciating its production equipment on straight-line basis over 10 years, taking a full year's depreciation in the year of acquisition and assuming no residual value at the end of the equipment's life. The company had invested $2,000,000 in the equipment at the beginning of 2012. At the beginning of 2014, the company decided to adjust the equipment's total useful life from 10 years up to 12 years, but with an estimated residual value of amounting to...
ABC Corp. has been depreciating its production equipment on straight-line basis over 10 years, taking a...
ABC Corp. has been depreciating its production equipment on straight-line basis over 10 years, taking a full year's depreciation in the year of acquisition and assuming no residual value at the end of the equipment's life. The company had invested $2,000,000 in the equipment at the beginning of 2012. At the beginning of 2014, the company decided to adjust the equipment's total useful life from 10 years up to 12 years, but with an estimated residual value of amounting to...
Hoover Corporation purchased equipment on January 1,2019,for$610,000.In 2019 and 2020,Hoover depreciated the asset on a straight-line...
Hoover Corporation purchased equipment on January 1,2019,for$610,000.In 2019 and 2020,Hoover depreciated the asset on a straight-line basis with an estimated useful life of eight years and a$10,000 residual value.In 2021,due to changes in technology,Hoover revised the useful life to a total of four years with no residual value.What depreciation would Hoover record for the year 2021 on this equipment?(Round your answer to the nearest dollar amount.)
Nanki Corporation purchased equipment on January 1,2016, for $640,000. In 2016 and 2017, Nanki depreciated the...
Nanki Corporation purchased equipment on January 1,2016, for $640,000. In 2016 and 2017, Nanki depreciated the asset on a straight-line basis with an estimated useful life of ten years and a $10,000 residual value. In 2018, due to changes in technology, Nanki revised the useful life to a total of eight years with no residual value. What depreciation would Nanki record for the year 2018 on this equipment - show the journal entry to record the depreciation. Account Dr. Cr....
Nanki Corporation purchased equipment on January 1, 2019, for $647,000. In 2019 and 2020, Nanki depreciated...
Nanki Corporation purchased equipment on January 1, 2019, for $647,000. In 2019 and 2020, Nanki depreciated the asset on a straight-line basis with an estimated useful life of eight years and a $15,000 residual value. In 2021, due to changes in technology, Nanki revised the useful life to a total of four years with no residual value. What depreciation would Nanki record for the year 2021 on this equipment?
Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation...
Swindall Industries uses straight-line depreciation on all of its depreciable assets. The company records annual depreciation expense at the end of each calendar year. On January 11, 2014, the company purchased a machine costing $94,000. The machine’s useful life was estimated to be 12 years with an estimated residual value of $19,400. Depreciation for partial years is recorded to the nearest full month. In 2018, after almost five years of experience with the machine, management decided to revise its estimated...
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is...
Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $4,800. The cost of the building was $96,000. The current book value of the equipment (January 1, 2018) is $81,600. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2018, the company decided to reduce the original useful life by 25% and to establish a salvage value of $4,800. The firm also decided double-declining-balance depreciation...
A company purchased a building for $900,000 on January 1. The building is being depreciated over...
A company purchased a building for $900,000 on January 1. The building is being depreciated over 40 years with an estimated residual value of $100,000. What will be the book value of the building in 10 years (assuming a December 31 year end)? a.$675,000 b.$575,000 c.$700,000 d.$600,000
2-Eckland Manufacturing Co. purchased equipment on January 1, 2019, at a cost of $90,000. Straight-line depreciation...
2-Eckland Manufacturing Co. purchased equipment on January 1, 2019, at a cost of $90,000. Straight-line depreciation for 2019 and 2020 was based on an estimated eight-year life and $2,000 estimated residual value. In 2021, Eckland revised its estimate and now believes the equipment will have a total service life of only six years, while the residual value remains the same. Required: Compute depreciation for 2021 and 2022.
1) On Jan1 2015, Wax purchased equipment for $60000 cash, expecting it to remain in service...
1) On Jan1 2015, Wax purchased equipment for $60000 cash, expecting it to remain in service for 6 years. The corporation depreciates the equipment on a straight-line basis, with $2000 residual value. On May31 2017, the corporation sold the equipment for $18000 cash. Record both depreciation expense for 2017 and sale of the equipment on May31 2017. 2) Equipment was acquired on Jan1 2014, at a cost of $170000. The equipment was originally estimated to have a salvage value of...