On January 1, 2008, Klinefelter Company purchased a building for $520,000. The b
ID: 2421231 • Letter: O
Question
On January 1, 2008, Klinefelter Company purchased a building for $520,000. The building had an estimated life of 20 years and an estimated residual value of $20,000. The company has been depreciating the building using straight-line depreciation.
At the beginning of 2014, the following independent situations occur. For each of these situations, prepare all journal entries related to the building for 2014. Ignore income taxes.
a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years)
Explanation / Answer
Statement showing computations Particulars Amount Cost of Building 520,000.00 Salvage Value 20,000.00 Life in years 20.00 Depreciation per year = (520,000- 20,000)/20 25,000.00 Depreciation for 2008 25,000.00 Depreciation for 2009 25,000.00 Depreciation for 2010 25,000.00 Depreciation for 2011 25,000.00 Depreciation for 2012 25,000.00 Depreciation for 2013 25,000.00 Total Dep till 2013 = 25000*6 150,000.00 Remaining value at starting of 2014 = 520,000 - 150,000 370,000.00 Remaining life in years 10.00 Salvage Value 20,000.00 Depreciation for 2014 = (370,000- 20,000)/10 35,000.00 Journal Entries Date Particulars Dr Amt Cr Amt 12/31/2014 Depreciation Expense Dr 35,000.00 To Building 35,000.00
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