A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the assumption it would have a 25-year life and a $20,000 salvage value. At the beginning of the building's 11th year it was recognized the building had 10 years of remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000. 1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life? Cost Less: Salvage value Depreciable cost Annual depreciation --------------------------------> 2. What is the accumulated depreciation at the end of Year 10? Accumulated depreciation ------------------------> 3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value? Cost Less: Accumulated depreciation Book value Less: Revised salvage value Depreciable cost Annual depreciation -------------------------------->
A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the assumption it would have a 25-year life and a $20,000 salvage value. At the beginning of the building's 11th year it was recognized the building had 10 years of remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000. 1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life? Cost Less: Salvage value Depreciable cost Annual depreciation --------------------------------> 2. What is the accumulated depreciation at the end of Year 10? Accumulated depreciation ------------------------> 3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value? Cost Less: Accumulated depreciation Book value Less: Revised salvage value Depreciable cost Annual depreciation -------------------------------->
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 1AFE
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Question
| A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the |
| assumption it would have a 25-year life and a $20,000 salvage value. |
| At the beginning of the building's 11th year it was recognized the building had 10 years of |
| remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000. |
| 1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life? |
| Cost |
| Less: Salvage value |
| Annual depreciation --------------------------------> |
| 2. What is the accumulated depreciation at the end of Year 10? |
| Accumulated depreciation ------------------------> |
| 3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value? |
| Cost |
| Less: Accumulated depreciation |
| Book value |
| Less: Revised salvage value |
| Depreciable cost |
| Annual depreciation --------------------------------> |
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