Problem
On January 1, 2015 Nuke Company purchased a building and equipment that have the following useful lives, residual value, and costs.
Building, 25-year estimated useful life, $4,000,000 cost, $400,000 residual value
Equipment, 10-year estimated useful life, $500,000 cost, no residual value
The building has been depreciated under the straight-line method through 2019. In 2020, the company decided to switch to the double-declining balance method of depreciation for the building. Nuke also decided to change the total useful life of the equipment to 7 years, with a residual value of $25,000 at the end of that time. The machinery is depreciated using the straight-line method.
Task
i. Prepare the journal entry necessary to record the depreciation expense on the building in 2020.
ii. Compute depreciation expense on the equipment for 2020.