Question

On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some...

On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some equipment to manufacture its product. The following information was determined at the time of purchase:

Cost Useful Life Residual Value Depreciation
Building $2,320,000 20 years $464,000 Double Declining
Equipment $1,060,000 25 years $106,000 Straight Line


On January 1, 2019, Crane decided to change the depreciation method for the building to the straight-line method, as a result of a change in the pattern of benefits received. There was no change to the total useful life or the residual value of the building.

Crane also decided that the equipment would have a total useful life of only 13 years, with a residual value of only $50,000. The depreciation method for the equipment did not change. Prepare the journal entries to record depreciation for both assets for 2019.

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Answer #1

Let us find the book value of the building and equipment at the starting of 2019

FOr building it is below:

Book value of the building at end of 3 years =1691280

From now the useful life is 17 years since 3 years passed

Depreciation=(1691280-464000)/17=72192.94

Depreciation expense(db)72192.94

Accumulated depreciation-building(cR)72192.94

For the equipment the yearly depreciation=(cost-salvage value)/years

=(1060000-106000)/25=38160

for 3 years the depreciaition accumulated is =38160*3=114480

Book value =1060000-114480=945520

Depreciation now chnaged to 13 years so years lef is 10 years new ddepreciation

=(945520-106000)/10=83952

Depreciation equipment(db)83952

accumulated depreciation-equipment(cR)83952

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