Date Accumulated Depreciation Useful life in Years Salvage Value Type of Asset A

Question

Date

Accumulated
Depreciation

Useful life
in Years

Salvage Value

Type of Asset

Acquired

Cost

1/1/17

Old

Proposed

Old

Proposed

(a)

Building

Warehouse

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.

Date

Accumulated
Depreciation

Useful life
in Years

Salvage Value

Type of Asset

Acquired

Cost

1/1/17

Old

Proposed

Old

Proposed

Building 1/1/11 $816,000 $116,100 40 50 $42,000 $57,500 Warehouse 1/1/12 115,000 22,040 25 20 4,800 26,960
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

Building: Book value on 1/1/17= 816000-116100= $699900 Remaining useful life = 50-6 = 44 Revised annual depreciation = (699900-57500)/44= $14600 Warehouse: Book value on 1/1/17= 115000-22040= $92960 Remaining useful life = 20-5 = 15 Revised annual depreciation = (92960-26960)/15= $4400 Building Warehouse Revised annual depreciation 14600 4400

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.