On January 1, 2013, the Powell Company purchased a building and machinery that have the following useful
Question:
On January 1, 2013, the Powell Company purchased a building and machinery that have the following useful lives, salvage value, and costs. Building, estimated useful life of 25 years, cost of $9,000,000, salvage value of $900,000 Machinery, estimated useful life of 10 years, cost of $1,200,000, no salvage value The building has been depreciated under the sum of the digits method of year through 2017. In 2018, the company decided to switch to the straight-line depreciation method for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a salvage value of $60,000 at the end of that time. Machinery is depreciated by the straight-line method.
Instructions
(a) Calculate the depreciation expense for 2018 and prepare the necessary journal entry to record the depreciation expense of the building in 2018.
(b) Calculate the depreciation expense of the machinery for 2018 and also prepare the journal entry for 2018.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield