Will Smith, the new controller of Fresh Prince Company, hasreviewed the expected useful lives and salvage values of selecteddepreciable assets at the beginning of 2007. Here are hisfindings:
|
|
|
Accumulated |
Useful Life |
|
|
| Type of |
Date |
|
Depreciation, |
(in years) |
SalvageValue
|
| Asset |
Acquired |
Cost |
Jan. 1,2007 |
Old |
Proposed |
Old |
Proposed |
| Building |
Jan. 1, 1999 |
$900,000 |
$172,000 |
40 |
50 |
$40,000 |
$47,600 |
| Warehouse |
Jan. 1, 2001 |
120,000 |
27,600 |
25 |
20 |
5,000 |
3,600 |
All assets are depreciated by the straight-line method. FreshPrince Company uses a calendar year in preparing annual financialstatements. After discussion, management has agreed to acceptWill's proposed changes. (The "Proposed" useful life is total life,not remaining life.)
Compute the revised annual depreciation on each asset in 2007.
Prepare the entry to record depreciation on the building in2007.