Finlay Limited constructed a building at a cost of $2.8 million and has occupied it since January 1994. It was estimated at that time that its life would be 40 years, with no residual value. In January 2014, a new roof was installed at a cost of $370,000, and it was estimated then that the building would have a useful life of 25 years from that date. The cost of the old roof was $190,000 and was capitalized in the Buildings account at that time.
Instructions
(a) What amount of depreciation was charged annually for the years 1994 through 2013? (Assume straight-line depreciation.)
(b) What entry should be made in 2014 to record the roof replacement?
(c) Prepare the entry in January 2014 to record the revision in the building's estimated life, if necessary.
(d) What amount of depreciation should be charged for the year 2014?