Exercise 9-8 (Part Level Submission) Terry Wade, the new controller of Hellickso

Question

Exercise 9-8 (Part Level Submission) Terry Wade, the new controller of Hellickson Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. His findings are as follows. Accumulated Useful life Depreciation in Years Salvage Value Date Type of Asset Acquired Cost 1/1/17 old Proposed old Proposesd Building 1/1/11 $800,000 $114,000 40 19,000 25 50 $40,000 $26,000 20 5,000 6,000 Warehouse 1/1/12 100,000 All assets are depreciated by the straight-line method. Hellickson Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Terry's proposed changes

Explanation / Answer

Cost of asset 800000 Accumulated depreciation till 1 jan 2017 114000 Book value as on 1 jan 2017 686000 Less Salvage value 26000 Depreciable cost 660000 Life of asset left (50-6) 44 Depreciation per year 15000 Dec 31 Depreciation expense 15000        Accumulated depreciation building 15000

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