On January 1, 2006, McElroy Company purchased a building and equipment that have the following useful lives,
Question:
On January 1, 2006, McElroy Company purchased a building and equipment that have the following useful lives, residual values, and costs. Building, 40-year estimated useful life, £50,000 residual value, £1,200,000 cost Equipment, 12-year estimated useful life, £10,000 residual value, £130,000 cost. The building has been depreciated under the double-declining-balance method through 2009. In 2010, the company decided to switch to the straight-line method of depreciation. McElroy also decided to change the total useful life of the equipment to 9 years, with a residual value of £5,000 at the end of that time. The equipment is depreciated using the straight-line method.
Instructions
(a) Prepare the journal entry (ies) necessary to record the depreciation expense on the building in 2010.
(b) Compute depreciation expense on the equipment for 2010.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0470616314
IFRS edition volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield