Bailand Company purchased a building for $218,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur: 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). 2. Bailand changes to the sum-of-the-years’-digits method. 3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bailand Company purchased a building for $218,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:
1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years).
2. Bailand changes to the sum-of-the-years’-digits method.
3. Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense.
General Journal
Bailand estimates that the asset has 8 years' life remaining (for a total of 12 years). Prepare the joumal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes. Additional Instruction
PAGE 16
GENERAL JOURNAL
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
Prepare the jourmal entry on December 31 to record depreciation in the fifth year after the change in depreciation method. Additional Instruction
PAGE 16
GENERAL JOURNAL
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
Prepare the jourmal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year. Ignore income taxes. Additional Instruction
PAGE 16
GENERAL JOURNAL
DATE
ACCOUNT TITLE
POST, REF.
DEBIT
CREDIT
1
4
Transcribed Image Text:General Journal Bailand estimates that the asset has 8 years' life remaining (for a total of 12 years). Prepare the joumal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Prepare the jourmal entry on December 31 to record depreciation in the fifth year after the change in depreciation method. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Prepare the jourmal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year. Ignore income taxes. Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST, REF. DEBIT CREDIT 1 4
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