Question

Victor Mineli.the new controller of Crane 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 Proposed Type of Date Asset Acquired Cost Building lan. 1, 2014 $772,000 Warehouse Jan. 1, 2017 164,000 Accumulated Depreciation, Jan. 1,2022 $141,200 31,690 Old 40 25 Proposed 5 9 20 Old $68,000 5,550 $35,200 4,810 All assets are depreciated by the straight-line method Crane Company uses a calendar year in preparing annual financial statements. After discussian, management has agreed to accept Victor's proposed changes. (The Proposed'usctuillte is totall , not remaining ito.) Compute the revised annual depreciation on each asset in 2022.(Round answers to O decimal places, s. 125.) Building Warehouse Revised annual depreciation $ eTextbook and Media List of Accounts 125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If ne entry is required, select "No Entry for the account Prepare the entry to record depreciation on the building in 2022.(Round answers to O decimal places, e. titles and enter o for the amounts.) Account Titles and Explanation Debit Credit cTextbook and Media List of Accounts

Answer 1

Building

Cost = $772000

Accumulated depreciation = $141800

Cost at the beginning of 2022 = ($772000 - $141800) = $630200

Years already spent = 8 years

New life = 58 years

Remaining years = 50 years

New salvage value = $35200

Revised depreciation = ($630200 - $35200)/50 = $11900

Warehouse

Value on 1 Jan 2022 = ($164000 - $31690) = $132310

Years remaining = 20 - 5 = 15 years

Revised depreciation = ($132310 - $4810)/15 = $8500

Entry to record depreciation on building

Particulars	debit	credit
Depreciation	$132310
Accumulated depreciation on building		$132310

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