Changes and Corrections of Depreciation
Response to the following problem:
On January 1, 2005, the Klinefelter Company purchased a building for $520,000. The building had an estimated life of 20 years and an estimated residual value of $20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2011, the following independent situations occur:
1. The company estimates that the building has a remaining life of 10 years (for a total of 16 years).
2. The company changes to the sum-of-the-years'-digits method.
3. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year.
Required:
For each of the independent situations, prepare all of the journal entries related to the building for 2011. Ignore income taxes.