Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives
Brett Richard, the new controller of Maldonado Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. Here are his findings:
Accumulated Useful Life
Type of Date Depreciation (in years) Salvage Value
Asset Acquired Cost Jan. 1, 2012 Old Proposed Old Proposed
Building Jan. 1, 2004 $947,850 $176,260 40 50 $49,170 $35,430
Warehouse Jan. 1, 2007 $144,050 42,080 25 20 6,200 4,540
All assets are depreciated by the straight-line method. Maldonado Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Brett’s proposed changes.
- a) Compute the revised annual depreciation on each asset in 2012.
- b) Prepare the entry to record depreciation on the building in 2012.