Brett Richard, the new controller of Maldonado Company, has reviewed the expecte
ID: 2842113 • Letter: B
Question
Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings:Type of
Date Accumulated
Depreciation,
Useful Life (in years) Salvage Value Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed Building Jan. 1, 2004 $867,900 $162,958 40 48 $53,110 $36,100 Warehouse Jan. 1, 2007 124,100 23,764 25 20 5,280 4,090
All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings:
Type of
Date Accumulated
Depreciation,
Useful Life (in years) Salvage Value Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed Building Jan. 1, 2004 $867,900 $162,958 40 48 $53,110 $36,100 Warehouse Jan. 1, 2007 124,100 23,764 25 20 5,280 4,090
All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings:
Type of
Date Accumulated
Depreciation,
Useful Life (in years) Salvage Value Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed Building Jan. 1, 2004 $867,900 $162,958 40 48 $53,110 $36,100 Warehouse Jan. 1, 2007 124,100 23,764 25 20 5,280 4,090
All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett Type of
Date Accumulated
Depreciation,
Useful Life (in years) Salvage Value Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings:
Type of
Date Accumulated
Depreciation,
Useful Life (in years) Salvage Value Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed Building Jan. 1, 2004 $867,900 $162,958 40 48 $53,110 $36,100 Warehouse Jan. 1, 2007 124,100 23,764 25 20 5,280 4,090
All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings: All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett's proposed changes. (The "Proposed" useful life is total life, not remaining life.) Compute the revised annual depreciation on each asset in 2012. (Round answers to 0 decimal places, e.g. 125.)
Explanation / Answer
(a) Compute the revised annual depreciation on each asset in 2010. (Round to 0 decimal places, i.e. 2,350.)
Building
Jan. 1, 2002 - Jan. 1, 2010 = Eight years of depreciation
903,430 - 184,890 = 718,540 Book value of asset
(718,540 - 35,360 new salvage value) / 42 years useful life remaining = 16,266 New Depreciation Expense per year.
Warehouse
Jan. 2, 2005 - Jan. 1 2010 = Five years of depreciation
155,510 - 32,160 = 123,350 Book value of asset.
123,350 - 4,490 new salvage value) / 15 years useful life remaining = 7,924 New Depreciation Expense per year.
(b) Prepare the entry to record depreciation on the building in 2010.
Dr Depreciation Expense--Building 16,266
Cr Accumulated Depreciation--Building 16,266