Wholesale Hardware Consultants purchased a building for $590,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Wholesale realized that wear and tear on the building would wear it out before 35 years and that the estimated residual value should be $84,000. Starting with the 16th year, Wholesale began depreciating the building over a revised total life of 25 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the depreciation on the building for year 15. Date Accounts and Explanation Depreciation Expense-Building Accumulated Depreciation-Building To record depreciation on building. Now, journalize the depreciation on the building for year 16. Accounts and Explanation Date Depreciation Expense Building Accumulated Depreciation-Building To record depreciation on building. Debit 14,000 Debit 59200 Credit 14,000 Credit 59200

Wholesale Hardware Consultants purchased a building for $590,000 and depreciated it on a straight-line basis over a 35-year period. The estimated residual value is $100,000. After using the building for 15 years, Wholesale realized that wear and tear on the building would wear it out before 35 years and that the estimated residual value should be $84,000. Starting with the 16th year, Wholesale began depreciating the building over a revised total life of 25 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing the depreciation on the building for year 15. Date Accounts and Explanation Depreciation Expense-Building Accumulated Depreciation-Building To record depreciation on building. Now, journalize the depreciation on the building for year 16. Accounts and Explanation Date Depreciation Expense Building Accumulated Depreciation-Building To record depreciation on building. Debit 14,000 Debit 59200 Credit 14,000 Credit 59200

Name: Wholesale Hardware Consultants purchased a building for $590,000 and
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Description: Wholesale Hardware Consultants purchased a building for $590,000 and depreciated it on a straight-line basis over a35-year period. The estimated residual value is $100,000. After using the building for 15 years, Wholesale realizedthat wear and tear

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

Wholesale Hardware Consultants purchased a building for $590,000 and depreciated it on a straight-line basis over a
35-year period. The estimated residual value is $100,000. After using the building for 15 years, Wholesale realized
that wear and tear on the building would wear it out before 35 years and that the estimated residual value should be
$84,000. Starting with the 16th year, Wholesale began depreciating the building over a revised total life of 25 years
using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record
debits first, then credits. Select the explanation on the last line of the journal entry table.)
Begin by journalizing the depreciation on the building for year 15.
Date
Accounts and Explanation
Depreciation Expense-Building
Accumulated Depreciation-Building
To record depreciation on building.
Now, journalize the depreciation on the building for year 16.
Accounts and Explanation
Date
Depreciation Expense-Building
Accumulated Depreciation-Building
To record depreciation on building.
Debit
14,000
Debit
59200
Credit
14,000
Credit
59200

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