Response to the following problem:
On January 1, 2007, Powell Company purchased a building and machinery that have the following useful lives, residual value, and costs.
Building, 25-year estimated useful life, $4,000,000 cost, $400,000 residual value
Machinery, 10-year estimated useful life, $500,000 cost, no residual value
The building has been depreciated under the straight-line method through 2011. In 2012, the company decided to switch to the double-declining balance method of depreciation for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a residual value of $25,000 at the end of that time. The machinery is depreciated using the straight-line method.
(a) Prepare the journal entry necessary to record the depreciation expense on the building in 2012.
(b) Compute depreciation expense on the machinery for 2012.