Exercise 9-6 (Part Level Submission) Victor Mineli, the new controller of Crane

Question

Exercise 9-6 (Part Level Submission) Victor Mineli, the new controller of Crane Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. Here are his findings Accumulated Depreciation, Jan. 1, 2017 Useful Life (in years) Type of Date Salvage Value Old $134,400 40 23,290 25 Old Proposed $65,000 $36,700 5,100 Acquired Proposed Asset Building Warehouse 2012 Cost $737,000 121,000 Jan. 1, 2009 48 Jan. 1, 20 4,550 All assets are depreciated by the straight-line method. Crane Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Victor's proposed changes. (The "Proposed" useful life is total life, not remaining life.) (a) Compute the revised annual depreciation on each asset in 2017. (Round answers to o decimal places, e.g. 125.) Building Warehouse Revised annual depreciation s

Explanation / Answer

Revised annual depreciation for Building Net book value as on Jan 1, 2017 = 737000-134400 = $602600 Revised salvage value of asset = 36700 Revised useful life of the asset = 48 years Years already covered = 8 years (2009 to 2017) Remaining useful life = 48-8 = 40 years Revised annual depreciation for Building = (602600-36700)/40 = $14147.5 Revised annual depreciation for Warehouse Net book value as on Jan 1, 2017 = 121000-23290 = $97710 Revised salvage value of asset = 5100 Revised useful life of the asset = 20 years Years already covered = 5 years (2012 to 2017) Remaining useful life = 20-5 = 15 years Revised annual depreciation for Warehouse = (97710-5100)/15 = $6174

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