Buhner Company constructed a building at a cost of $3,000,000 and occupied it beginning in January 2001. At that time, it was estimated that the building would have a useful life of 40 years and zero salvage value. Buhner uses straight-line depreciation. In January 2021, a new roof was installed on that building at a cost of $500,000. At that time, it was estimated that the building now has a remaining useful life of only 25 years and zero salvage value. The cost of the old roof was $200,000. Required How much depreciation expense should Buhner have recorded each year in the years 2001 to 2000? (Assume straight-line depreciation.) b)Prepare the journal entry that Buhner needs to make in 2021 to record the replacement of the roof. c)How much depreciation expense should Buhner record in the year 2021?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Buhner Company constructed a building at a cost of $3,000,000 and occupied it beginning in January 2001. At that time, it was estimated that the building would have a useful life of 40 years and zero salvage value. Buhner uses straight-line
Required
How much depreciation expense should Buhner have recorded each year in the years 2001 to 2000? (Assume straight-line depreciation.)
b)Prepare the
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