On January 1, 2013, management of Micro Storage Inc. determined that a revision in the estimates associated

Question:

On January 1, 2013, management of Micro Storage Inc. determined that a revision in the estimates associated with the depreciation of storage facilities was appropriate. These facilities, purchased on January 5, 2011, for $300,000, had been depreciated using the straight-line method with an estimated of $30,000 and an estimated useful life of 20 years. Management has determined that the storage facilities' expected remaining useful life is 10 years and that they have an estimated of $40,000.
1. How much depreciation was recognized by Micro Storage in 2011 and 2012?
2. How much depreciation will be recognized by Micro Storage in 2013 as a result of the changes in estimates?
3. What journal entry is required to account for the changes in estimates at the beginning of 2013?
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...