InstructionsBailand 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), thefollowing 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.Required:For each of the independent situations, prepare all the journal entries relatingthe building for the fifth year. Ignore income taxes. General JournalBailand 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 InstructionPAGE 16GENERAL JOURNALDATEACCOUNT TITLEPOST, REF.DEBITCREDITPrepare the journal entry on December 31 to record depreciation in the fifth year after the change in depreciation method. Additional InstructionPAGE 16GENERAL JOURNALDATEACCOUNT TITLEPOST. REF.DEBITCREDITPrepare the journal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year. Ignore income taxes. Addlitional InstructionPAGE 16GENERAL JOURNALDATEACCOUNT TITLEPOST REEDEBITCREDIT

Baland Company purchased a building for $218,000 that had an estimated residual value of $8,000 and an estimated senvice ife of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fith year (before it records depreciation expense for the year), the following independent situations occur 1. Baland estimates that the asset has 8 years' ife remaining (for a total of 12 years) 2. Baland changes to the sum-of-the-years-digits method. 3. Baland discovers that the estimated residual value has been ignored in the computation of depreciation expense. Required: For each of the independent situations, prepare all the journal entries relating to the building for the fth year. Ignore income tares

Baland Company purchased a building for $218,000 that had an estimated residual value of $8,000 and an estimated senvice ife of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fith year (before it records depreciation expense for the year), the following independent situations occur 1. Baland estimates that the asset has 8 years' ife remaining (for a total of 12 years) 2. Baland changes to the sum-of-the-years-digits method. 3. Baland discovers that the estimated residual value has been ignored in the computation of depreciation expense. Required: For each of the independent situations, prepare all the journal entries relating to the building for the fth year. Ignore income tares

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bailand Company purchased a building for $286,000 that had an estimated residual value of $6,000 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. 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes.
Susquehanna Company purchased an asset at the beginning of the current year for $250,000. The estimated residual value is $25,000. Susquehanna estimates that the asset will be used for 10 years and uses straiglt-line depreciation. Calculate the depreciation expense per year.
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