Problem -
On January 1, 2015, Ade1phi Company purchased a building and machinery that have the following useful lives, salvage value, and costs.
Building, 25-year estimated useful life, $6,000,000 cost, $600,000 salvage value.
Machinery, 10-year estimated useful life, $800,000 cost, no salvage value.
The building has been depreciated under the straight-line method through the end of 2019. At the beginning of 2020, the company decided to switch to the double-declining balance method of depreciation for the building. The total estimated life and the salvage value did not change.
Also at the beginning of 2020, Ade1phi decided to change the total useful life of the machinery to 8 years, with a salvage value of $40,000 at the end of that time. The machinery is depreciated using the straight-line method and the method is not changed.
Required -
(a) Prepare the journal entry necessary to record the depreciation expense on the building in 2020. Show the necessary work and label all computations.
(b) Compute depreciation expense on the machinery for 2020. Show the necessary work and label all computations.