On January 1, 2007, Powell Company purchased a building and machinery that have
ID: 2369369 • Letter: O
Question
On January 1, 2007, Powell Company purchased a building and machinery that have the following useful
lives, residual value, and costs.
Building, 25-year estimated useful life, $4,000,000 cost, $400,000 residual value
Machinery, 10-year estimated useful life, $500,000 cost, no residual value
The building has been depreciated under the straight-line method through 2011. In 2012, the company decided to switch to the double-declining balance method of depreciation for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a residual value of $25,000 at the end of that time. The machinery is depreciated using the straight-line method.
Instructions
(a) Prepare the journal entry necessary to record the depreciation expense on the building in 2012.
(2 marks)
(b) Compute depreciation expense on the machinery for 2012. (2 marks)
Explanation / Answer
http://webcache.googleusercontent.com/search?q=cache:ebUj-W65aPoJ:www.business.umt.edu/Libraries/Brent_Russ/ACTG201_chap009_ppt.sflb.ashx+&cd=2&hl=en&ct=clnk&gl=in
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