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:

Estopped

Barred, impeded, or precluded.

Promissory Estoppel

A legal principle that prevents a party from withdrawing a promise when the other party has relied upon it to their detriment.

Preexisting Duty

An obligation or duty that already exists under contract law and does not constitute valid consideration for a new agreement.

Rescission

The act of canceling, voiding, or annulling a contract, returning the parties to their positions prior to the contract.