On July 1, 2022, WAVY Company has a building with a cost of P4,000,000 and accumulated depreciation of P1,600,000. On the same date, WAVY Company commits to a plan to sell the building by March 1, 2023. The building has a fair value of P2,000,0o0 and it is estimated that the selling cost associated with the disposal of the building will be P150,000. As of July 1, 2022, the building has a remaining life of 15 years.

On July 1, 2022, WAVY Company has a building with a cost of P4,000,000 and accumulated depreciation of P1,600,000. On the same date, WAVY Company commits to a plan to sell the building by March 1, 2023. The building has a fair value of P2,000,0o0 and it is estimated that the selling cost associated with the disposal of the building will be P150,000. As of July 1, 2022, the building has a remaining life of 15 years.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 11MCQ

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
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