ipment, estimated service life, 5 years; no salvage value Iding, estimated service life, 40 years; salvage value, $567,000 $621,000 $5,007,000 equipment has been depreciated using the double-declining balance method for the first 2 years for fina 025, the company decided to change the method of computing depreciation to the straight-line method t ge was made in the estimated service life or salvage value. It was also decided to change the total estim:
ipment, estimated service life, 5 years; no salvage value Iding, estimated service life, 40 years; salvage value, $567,000 $621,000 $5,007,000 equipment has been depreciated using the double-declining balance method for the first 2 years for fina 025, the company decided to change the method of computing depreciation to the straight-line method t ge was made in the estimated service life or salvage value. It was also decided to change the total estim:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Do not provide image in solution.and provide detailed explanation.
Transcribed Image Text:Pharoah Inc. acquired the following assets in January 2023.
Equipment, estimated service life, 5 years; no salvage value
Building, estimated service life, 40 years; salvage value, $567,000
The equipment has been depreciated using the double-declining balance method for the first 2 years for financial reporting purposes.
In 2025, 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 40 years to 35 years, with no change in the estimated salvage value. The building is depreciated on the straight-line
method.
(a)
(b)
No. Account Titles and Explanation
(a)
(b)
Prepare the general journal entry to record depreciation expense for the equipment in 2025.
Prepare the journal entry to record depreciation expense for the building in 2025.
Depreciation Expense
Accumulated Depreciation-Equipment
$621,000
$5,007,000
Depreciation Expense
Accumulated Depreciation-Buildings
Debit
Credit
DOOD
0000
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