(Learning Objective 3: Change a plant asset’s useful life) Chester Consultantspurchased a building for $430,000 and depreciated it on a straight-line basis over 40 years. Theestimated residual value was $70,000. After using the building for 20 years, Chester realizedthat the building would remain useful only 14 more years. Starting with the 21st year, Chesterbegan depreciating the building over the newly revised total life of 34 years and decreasedthe estimated residual value to $12,980. Record depreciation expense on the building foryears 20 and 21.
(Learning Objective 3: Change a plant asset’s useful life) Chester Consultantspurchased a building for $430,000 and depreciated it on a straight-line basis over 40 years. Theestimated residual value was $70,000. After using the building for 20 years, Chester realizedthat the building would remain useful only 14 more years. Starting with the 21st year, Chesterbegan depreciating the building over the newly revised total life of 34 years and decreasedthe estimated residual value to $12,980. Record depreciation expense on the building foryears 20 and 21.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(Learning Objective 3: Change a plant asset’s useful life) Chester Consultants
purchased a building for $430,000 and
estimated residual value was $70,000. After using the building for 20 years, Chester realized
that the building would remain useful only 14 more years. Starting with the 21st year, Chester
began depreciating the building over the newly revised total life of 34 years and decreased
the estimated residual value to $12,980. Record depreciation expense on the building for
years 20 and 21.
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