1. Depreciation Changes On January 1, 2006, McElroy Company purchased a building and equipment that have the following useful lives, salvage values, and costs.
Building, 40-year estimated useful life, $50,000 salvage value, $1,200,000 cost
Equipment, 12-year estimated useful life, $10,000 salvage value, $130,000 cost
The building has been depreciated under the double-declining balance method through 2009. In 2010, the company decided to switch to the straight-line method of depreciation. McElroy also decided to change the total useful life of the equipment to 9 years, with a salvage value of $5,000 at the end of that time. The equipment is depreciated using the straight-line method.
Instructions
(a) Prepare the journal entry(ies) necessary to record the depreciation expense on the building in 2010.
(b) Compute depreciation expense on the equipment for 2010.