Lindy Rig, the new controller of Bellingham Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2002. Her findings are as follows.
|
Type of Asset
|
Date Acquired
|
Cost
|
Accumulated
Depreciation
1/1/02
|
Useful Life
in Years
Old Proposed
|
Salvage Value
Old Proposed
|
|
Building
|
1/1/96
|
$800,000
|
$114,000
|
40
|
50
|
$40,000
|
$70,000
|
|
Warehouse
|
1/1/99
|
100,000
|
11,400
|
25
|
20
|
5,000
|
3,600
|
All assets are depreciated by the straight-line method. Bellingham Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Lindy’s proposed changes.
Instructions:
(a) Compute the revised annual depreciation on each asset in 2002. (show computations.)
(b) Prepare the entry (or entries) to record depreciation on the building in 2002.