vage value Building, estimated service life, 40 years; salvage value, $567,000 $5,007,000 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) Prepare the general journal entry to record depreciation expense for the equipment in 2025. (b) Prepare the journal entry to record depreciation expense for the building in 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"
vage value Building, estimated service life, 40 years; salvage value, $567,000 $5,007,000 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) Prepare the general journal entry to record depreciation expense for the equipment in 2025. (b) Prepare the journal entry to record depreciation expense for the building in 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text: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)
$621,000
$5,007,000
(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.
(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry
for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to O decimal places, eg. 25,000)
No. Account Titles and Explanation
(a)
Debit
Credit
P
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