The Estimated Life of a Building That Has Been Depreciated

question 4

Multiple Choice

The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a 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:

Demand Deposits

Bank account funds that are available on demand without any delay or penalties, like those in checking accounts.

Excess Reserves

The reserves held by a bank in excess of the minimum reserve requirements set by central banking authorities.

Required Reserves

The minimum amount of reserves that banks are required to hold by law, as a safeguard against bank runs.

Demand Deposits

Bank account balances that can be withdrawn on demand without any notice, such as in checking accounts.