Computing the annual depreciation


Changes and Corrections of Depreciation

Response to the following problem:

On January 1, 2005, the Klinefelter Company purchased a building for $520,000. The building had an estimated life of 20 years and an estimated residual value of $20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2011, the following independent situations occur:

1. The company estimates that the building has a remaining life of 10 years (for a total of 16 years).

2. The company changes to the sum-of-the-years'-digits method.

3. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year.

Required:

For each of the independent situations, prepare all of the journal entries related to the building for 2011. Ignore income taxes.

 

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Accounting Basics: Computing the annual depreciation
Reference No:- TGS02106109

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