Assume United Van Lines purchased a building for $900,000 and depreciated it on a straight-line basis over
Question:
Assume United Van Lines purchased a building for $900,000 and depreciated it on a straight-line basis over 40 years. The estimated residual value was $100,000. After using the building for 20 years, United realized that the building will remain useful only 15 more years. Starting with the 21st year, United began depreciating the building over the newly revised total life of 35 years and decreased the estimated residual value to $50,000. Record depreciation expense on the building for years 20 and 21.
Step by Step Answer:
Date Particular DR Cr 21th year Dep Expense 23333 Building 23333 22th Year Dep Expen...View the full answer
Financial Accounting
ISBN: 978-0135012840
7th edition
Authors: Walter T. Harrison, Charles T. Horngren
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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