Problem 1.) Changes in depreciation methods, estimates.

On January 1, 2008, Powell Company purchased a building and machinery that have the following useful lives, salvage value, and costs.

Building, 25-year estimated useful life, $5,000,000 cost, $500,000 salvage value

Machinery, 10-year estimated useful life, $700,000 cost, no salvage value

The building has been depreciated under the straight-line method through 2012. In 2013, the company decided to switch to the double-declining balance method of depreciation for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a salvage value of $35,000 at the end of that time. The machinery is depreciated using the straight-line method.

Instructions

(a) Prepare the journal entry necessary to record the depreciation expense on the building in 2013.

(b) Compute depreciation expense on the machinery for 2013.