Question

1 In 1990, Kingbird Company completed the construction of a building at a cost of $2040,000 and first occupied it in January 1991.It was estimated that the building will have a useful life of 40 years and a salvage value of $61,200 at the end of that time Early in 2001, an addition to the building was constructed at a cost of $510,000. At that time, It was estimated that the remaining life of the building would be, as origlnally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $20,40O In 2019, It is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years beyond the original estimate. Using the straight-line method, compute the annual depreclation that would have been charged from 1991 through 2000. Annual depreciation from 1991 through 2000 yr List af Accounts Compute the annual depreciation that would have been charged from 2001 through 2018 Annual depreclation from 2001 through 2018 /yr List of Accounts Prepare the entry, not indent manuay necessary to adjust the account balances because o the revision of the estimated life in 2019. no ent is re select ר o entry or the account tit es and enter 0 or the mount Credit d count es are outomatica y in en ed ena unt s entered Do Account Titles and Explanatiorn Debit Credit List of Accounts Compute the annual depreclaton to be chareed, beginnine with 2019. (Round answer to O decimal places, e.45,892) Annual depreciation expense-building

Answer 1

1. Annual depreciation from 1991 through 2000 = (Cost - Salvage value)/40 = (2,040,000- 61,200) /40 = 49470

2.

Book value on 2001 [2,040,000 - 49470*10]	1545300
Add: Additions to the building	510,000
Total book value	2,055,300
Less: Salvage value [61200+20400]	81,600
Depreciable value	1,973,700
No of years	30
Annual depreciation from 2001 to 2018	65790

3. No entry

4.

Book value as on Jan 2019 [2,055,300 - [65790*18]]	871080
Less: Salvage Value	81,600
Depreciable value	789,480
No of years [12+20]	32
Annual depreciation	24671