In 1993, Blossom Company completed the construction of a building at a cost of $2,460,000 and...
In 1993, Blossom Company completed the construction of a
building at a cost of $2,460,000 and first occupied it in January
1994. It was estimated that the building will have a useful life of
40 years and a salvage value of $74,400 at the end of that
time.
Early in 2004, an addition to the building was constructed at a
cost of $615,000. At that time, it was estimated that the remaining
life of the building would be, as originally estimated, an
additional 30 years, and that the addition would have a life of 30
years and a salvage value of $24,600.
In 2022, it is determined that the probable life of the building
and addition will extend to the end of 2053, or 20 years beyond the
original estimate.
(A) Using the straight-line method, compute the annual
depreciation that would have been charged from 1994 through
2003.
| Annual depreciation from 1994 through 2003 |
$___/yr
(B)Compute the annual depreciation that would have been charged
from 2004 through 2022.
| Annual depreciation from 2004 through 2021 |
$ |
/ yr |
(C) Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2021.
(D) Compute the annual depreciation to be charged, beginning
with 2022. (Round answer to 0 decimal places, e.g.
45,892.)
| Annual depreciation expense—building |
$ |
Homework Answers
| A | ||
| Cost | 2460000 | |
| Less: Salvage value | 74400 | |
| Depreciable cost | 2385600 | |
| Useful life | 40 | |
| Annual depreciation from 1994 through 2003 | 59640 | / yr |
| B | ||
| Cost | 2460000 | |
| Add: Additions | 615000 | |
| Total cost | 3075000 | |
| Less: Accumulated depreciation from 1994 through 2003 | 596400 | =59640*10 |
| Book value, Jan 2004 | 2478600 | |
| Less: Salvage value | 99000 | =74400+24600 |
| Depreciable cost | 2379600 | |
| Useful life | 30 | |
| Annual depreciation from 2004 through 2021 | 79320 | / yr |
| C | ||
| No entry is required because of the revision of the estimated life in 2021 | ||
| No entry 0 | ||
| No entry 0 | ||
| D | ||
| Book value, Jan 2004 | 2478600 | |
| Less: Accumulated depreciation from 2004 through 2021 | 1427760 | =79320*18 |
| Book value, Jan 2022 | 1050840 | |
| Less: Salvage value | 99000 | =74400+24600 |
| Depreciable cost | 951840 | |
| Useful life | 32 | =50-18 |
| Annual depreciation expense—building | 29745 | |
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