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Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $5,000. The cost of the building was $100,000. The current book value of the equipment is $85,000. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2013, the company decided to reduce the original useful life by 25% and to establish a salvage value of $5,000. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects.

Required:

(1.) Record the journal entry, if any, to report the accounting change.
(2.) Record the annual depreciation for 2013.

Image text transcribed for accessibility Annual depreciation expense on a building purchased a few years ago is $5,000. The cost of the building was $100,000. The current book value of the equipment is $85,000. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2013, the company decided to reduce the original useful life by 25% and to establish a salvage value of $5,000. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects. Record the journal entry, if any, to report the accounting change. Record the annual depreciation for 2013.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9963565

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