Frank White the new controller of Youngman Company, has reviewed the expected us
ID: 2572719 • Letter: F
Question
Frank White the new controller of Youngman Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2015. His findings are as follows.
All assets are depreciated by the straight-line method. Youngman Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Frank’s proposed changes.
(in Years) Salvage Value Type of
Asset Date
Acquired Cost Accumulated
Depreciation,
1/1/15 Old Proposed Old Proposed Building 1/1/09 $1,600,000 $228,000 40 50 $80,000 $52,000 Warehouse 1/1/10 207,000 40,000 25 20 7,000 5,000 Compute the revised annual depreciation on each asset in 2015. Type of Asset Building Warehouse Revised annual depreciation Prepare the entry to record depreciation on the building in 2015. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31
Explanation / Answer
Book value as on 1/1/15 =cost-Accumulated depreciation
Building :[1,600,000-228,000] = 1,372,000
warhouse : [207000-40000]=167000
A)Depreciation expense =[book value -revised salvage value]/revised useful life]
Building : [1,372,000-52000]/ 50 =$ 26400
warehouse :[ 167,000-5,000]/20 = $ 8100
b)
Date Account Debit credit Dec 31 Depreciation expense 26400 Accumulated depreciation -building 26400Related Questions
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