The Service Life of a Building That Has Been Depreciated

question 54

Multiple Choice

The service life of a building that has been depreciated for 30 years of an originally estimated 50-year life (no residual value) has been revised to an estimated remaining life of 10 years. Based on this information, the accountant should

• A) continue to depreciate the building over the original 50-year life.
• B) depreciate the remaining book value over the remaining life of the asset.
• C) adjust accumulated depreciation to its appropriate balance through net income, based on a 40-year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years.
• D) adjust accumulated depreciation to its appropriate balance through retained earnings, based on a 40-year life, and then depreciate the adjusted book value as though the estimated life had always been 40 years.

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Definitions:

Economic Changes

Refers to shifts in the structure, performance, or organization of an economy, including changes in market conditions, regulatory environments, and the distribution of wealth and resources.

CSR

Corporate Social Responsibility; a business model in which companies integrate social and environmental concerns in their operations and interactions with stakeholders.

Corporate Social Responsibility

A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis.

Self-Regulation

The ability to manage one's emotions, thoughts, and behaviors in different situations, often leading to goal achievement and adaptation to social norms.