Question

0.25/1 Question 1 View Policies Show Attempt History Current Attempt in Progress Victor Minell, the new controller of Pharoah Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2022. Here are his findings: Useful Life (in years) Salvage Value Old Proposed Old Type of Date Asset Acquired Cost Building Jan 1, 2014 $800,500 Warehouse Jan 1, 2017 117,000 Accumulated Depreciation, Jan. 1,2022 $147,300 22,440 Proposed $35,800 $64,000 40 25 4,800 4,560 All assets are depreciated by the straight-line method. Pharoah Company uses a calendar year in preparing annual financial statements. Alter discussion management has agreed to accept Victor's proposed changes. (The "Proposed useful life is total life, not remaining life.) x Your answer is incorrect. Compute the revised annual depreciation on each asset in 2022. (Round answers to o decimal places, e.g. 125.) Building Warehouse Revised annual depreciation $ 5997

Answer 1

Solution:

Particulars	Building	Watehouse
Book value on 01.01.2022	$653,200.00	$94,560.00
Revised salvage value	$35,800.00	$4,560.00
Remaining cost to be depreciated	$617,400.00	$90,000.00
Total revised useful life	58	20
Life already elapsed	8	5
Remaining useful life	50	15
Revised annual depreication	$12,348.00	$6,000.00

Journal Entries
Date	Particulars	Debit	Credit
31-Dec-22	Depreciation expense - Building Dr	$12,348.00
	To Accumulated depreciation - Building		$12,348.00
	(To record depreciation on building)