Concord Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,400 $519,400 Building, estimated service life, 30 years; no salvage value $735,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021.
Concord Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,400 $519,400 Building, estimated service life, 30 years; no salvage value $735,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Concord Cole Inc. acquired the following assets in January of 2018.
| Equipment, estimated service life, 5 years; salvage value, $15,400 | $519,400 | |
| Building, estimated service life, 30 years; no salvage value | $735,000 |
The equipment has been
| (a) | Prepare the general |
|
|---|---|---|
| (b) | Prepare the journal entry to record depreciation expense for the building in 2021. |
Expert Solution
Step 1
Journal entry is a process of recording and classifying business transactions into books of accounts initially. Depreciation refers to the amount by which the fixed asset value decreases throughout its useful life.
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