Exercise 9-8 Terry Wade, the new controller of Hellickson Company, has reviewed

Question

Exercise 9-8 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 Depreciation Useful life in Years Date Salvage Value Type of Asset Acquired Cost Building Warehouse 1/1/12 1/1/11 $810,000 110,000 $114,900 40 21,180 25 17 Old Proposed Old Proposed 50 $44,000 $43,900 20 4,100 13,820 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. Compute the revised annual depreciation on each asset in 2017 Building Warehouse Revised annual depreciation Prepare the entry to record depreciation on the building in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 Depreciation Expense Accumulated Depreciation

Explanation / Answer

Book value of Building = 810000-114900= $695100 Book value of Warehouse = 110000-21180= $88820 Revised annual depreciation: Building 14800 =(695100-43900)/(50-6) Warehouse 5000 =(88820-13820)/(20-5) 2 31-Dec Depreciation expense 14800         Accumulated depreciation-Building 14800

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