Lindy Rig, the new controller of Bellingham Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2002. Her findings are as follows.
Useful Life Accumulated in Years Salvage Value Type of Date Depreciation
Asset Acquired Cost 1/1/02 Old Proposed Old Proposed
Building 1/1/96 $800,000 $114,000 40 50 $40,000 $70,000
Warehouse 1/1/99 100,000 11,400 25 20 5,000 3,600
All assets are depreciated by the straight-line method. Bellingham Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Lindy's proposed changes.
Instructions Using Microsoft Excel
(a) Compute the revised annual depreciation on each asset in 2002. (Show computations.)
(b) Prepare the entry (or entries) to record depreciation on the building in 2002.