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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Revision of Depreciation

On January 1, 2019, the Kelley Company ledger showed a building with a cost of $250,000 and related accumulated depreciation of $96,000. The depreciation resulted from using straight-line depreciation with a useful life of 20 years and no residual value. On this date, Kelley determined that the building had a remaining useful life of 16 years and a residual value of $14,000.

Required:

Determine the depreciation expense for 2019.

To determine

When the estimates like useful life or residual value changes then Depreciation has to be revised. This revision of depreciation will have effect on current and future years.

To compute:

Revised depreciation.

Explanation

Building cost = $250000

Accumulated Depreciation=$96000

Hence Book value as on 01.01.19 =(250000-96000) = $154000

Revised De...

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