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Exercise 22-12 Your answer is partially correct. Try again. On January 1, 2014, Pearl Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, $52,400 salvage value, $760,000 cost Equipment, 12-year estimated useful life, $10,000 salvage value, $108,100 cost The building has been depreciated under the double-declining-balance method through 2017. In 2018, the company decided to switch to the straight-line method of depreciation. Pearl also decided to change the total useful life of the equipment to 9 years, with a salvage value of $4,800 at the end of that time. The equipment is depreciated using the straight-line method. (a) Prepare the journal entry necessary to record the depreciation expense on the building in 2018. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Depreciation Expense 14120 Accumulated Depreciation-Building 14120

Answer 1

	Building
	Depreciation rate		1/40*2
			5%
	Year	opening	Rate	Dep	Accumulated	Ending
		bal		expense	Dep	bal
	12/31/2014	760,000	5%	38000	38000	722,000
	12/31/2015	722,000	5%	36100	74100	685,900
	12/31/2016	685,900	5%	34295	108395	651,605
	12/31/2017	651,605	5%	32580	140975	619,025
	year 2018
	Book value in year 2018					619,025
	less:Salvage value					-52,400
	Depreciable cost					566,625
	Estimated useful life		(40-4)			36
	Depreciation expense					15740
	Account titles and Explanation				Debit	Credit
	Depreciation expense				15740
	Accumulated depreciation					15740