Annual Depreciation Expense on a Building Purchased a Few Years

question 116

Essay

Annual depreciation expense on a building purchased a few years ago (using the straight-line method) is $5,000. The cost of the building was $100,000. The current book value of the equipment (January 1, 2013) is $85,000. At the time of purchase, the asset was estimated to have a zero salvage value. On January 1, 2013, the company decided to reduce the original useful life by 25% and to establish a salvage value of $5,000. The firm also decided double-declining-balance depreciation was more appropriate. Ignore tax effects.
Required:
(1.) Record the journal entry, if any, to report the accounting change.
(2.) Record the annual depreciation for 2013.

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Definitions:

Altruistic Explanations

Justifications based on or showing a disinterested and selfless concern for the well-being of others.

Epicurius

An ancient Greek philosopher known for his philosophy that pleasure is the highest good and key to a happy life.

Human Existence

The condition or fact of living or having objective reality.

Tranquility

A state of peace and calm, free from disturbance or turmoil.