Kiran Shah, the new controller of Ginarrbrik Company, has reviewed the expected useful lives and salvage values
Question:
Kiran Shah, the new controller of Ginarrbrik Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2012. His findings are as follows.
All assets are depreciated by the straight-line method. Ginarrbrik Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Kiran??s proposed changes.Instructions(a) Compute the revised annual depreciation on each asset in 2012. (Show computations.)(b) Prepare the entry (or entries) to record depreciation on the building in2012.
Useful Life Accumulated Depreciation 1/1/12 Salvage Value Proposed $37,000 3,600 Type of Asset Date in Years Cost Old Proposed 40 25 Acquired 1/1/06 1/1/07 Old 50 20 $800,000 100,000 $114,000 19,000 $40,000 5,000 Building Warehouse
Step by Step Answer:
a Type of Asset Building Warehouse Book value 1112 Less Salv...View the full answer
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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