Depreciation Changes On January 1, 2006, McElroy Company purchased a building and equipment that have the following

Question:

Depreciation Changes On January 1, 2006, McElroy Company purchased a building and equipment that have the following useful lives, salvage values, and costs.

Building, 40-year estimated useful life, $50,000 salvage value, $1,200,000 cost

Equipment, 12-year estimated useful life, $10,000 salvage 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 salvage 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.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...