Question

Victor Mineli, the new controller of Cullumber 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 Type of Asset Date Acquired Accumulated Depreciation, Jan. 1, 2022 Cost Old Proposed Old Proposed Building Jan. 1, 2014 $946,500 $177,200 40 $60,500 $35,100 Warehouse Jan. 1, 2017 130,000 24,710 25 6,450 4,700 All assets are depreciated by the straight-line method. Cullumber Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Victor's proposed changes. (The "Proposed" useful life is total life, not remaining life.)

Answer 1

Type of Asset	Building	Warehouse
Cost	$946,500	$130,000
Less: Accumulated depreciation	$177,200	$24,710
Book Value Jan. 1, 2022	$769,300	$105,290
Less: Salvage value	$35,100	$4,700
Depreciable cost (1)	$734,200	$100,590
Revised remaining useful life in years (2)	50	15
(58 years - 8 years), (20 years - 5 years)
Revised annual depreciation (1) ÷ (2)	$14,684	$6,706