On January 1, 2019, Calu lives, salvage value, and Building, 30-year Machinery, 15-ye The building has been d decided to switch to the decided to change the tot date), with a salvage val straight-line method. Instructions a) Prepare a detaile. b) Prepare the jour Journal entry des c) Prepare a detaile-
On January 1, 2019, Calu lives, salvage value, and Building, 30-year Machinery, 15-ye The building has been d decided to switch to the decided to change the tot date), with a salvage val straight-line method. Instructions a) Prepare a detaile. b) Prepare the jour Journal entry des c) Prepare a detaile-
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2019, Calvin Company purchased a building and machinery that have the following useful
lives, salvage value, and costs.
Building, 30-year estimated useful life, $65,000,000 cost, $5,000,000 salvage value
Machinery, 15-year estimated useful life, $6,000,000 cost, no salvage value
The building has been depreciated under the straight-line method through 2023. In 2024, the company
decided to switch to the double-declining balance method of depreciation for the building. Calvin also
decided to change the total useful life of the machinery to 10 years (measured from the original acquisition
date), with a salvage value of $500,000 at the end of that time. The machinery is depreciated using the
straight-line method.
Instructions
a) Prepare a detailed calculation of 2024 depreciation expense on the building.
b) Prepare the journal entry necessary to record the depreciation expense on the building in 2024.
Journal entry description is not required.
c) Prepare a detailed calculation of 2024 depreciation expense on the machinery.
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Step 1: Introduction to depreciation:
VIEWStep 2: Requirement a- Calculation of depreciation expense on building in 2024:
VIEWStep 3: Requirement b- Preparing journal entry for depreciation expense on building in 2024:
VIEWStep 4: Requirement c- Calculation of depreciation expense on machinery in 2024:
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