Budget Hardware Consultants purchased a building for $800,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Budget realized that wear and tear on the building would wear it out before 35 years and that the estimated residualvalue should be $88,000. Starting with the 16th year, Budget began depreciating the building over a revised total life of 20 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)Begin by journalizing the depreciation on the building for year 15.DateAccounts and ExplanationDebitCredit

Name: Budget Hardware Consultants purchased a building for $800,000 and dep
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Description: Budget Hardware Consultants purchased a building for $800,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Budget realized that wear and tear on t

It is pertinent to note change in accounting estimates need to be accounted for prospectively…

Answered: Begin by journalizing the depreciation…

Business

Accounting

Begin by journalizing the depreciation on the building for year 15.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Budget Hardware Consultants purchased a building for $800,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Budget realized that wear and tear on the building would wear it out before 35 years and that the estimated residual
value should be $88,000. Starting with the 16th year, Budget began depreciating the building over a revised total life of 20 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Begin by journalizing the depreciation on the building for year 15.
Date
Accounts and Explanation
Debit
Credit

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