AC 302 WEEK 8 Exercise 22 Question 6

AC 302 WEEK 8 Exercise 22 Question 6
 
 	Your answer is correct
 	 Kathleen Cole Inc. acquired the following assets in January of 2012.
Equipment, estimated service life, 5 years; salvage value, $14,800		$446,350
Building, estimated service life, 30 years; no salvage value		$787,500

The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2015, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method.
(a)		Prepare the general journal entry to record depreciation expense for the equipment in 2015.
(b)		Prepare the journal entry to record depreciation expense for the building in 2015.


No.	Account Titles and Explanation	Debit	Credit
(a)	  
  
  

	  
  
  

(b)	  
  
  

	  
  
  

Exercise 22-6
(a) Depreciation to date on equipment


Cost of equipment		
Less: Depreciation to date		

Book value	 - 	Salvage value	 = 	Depreciable cost
$1
(b) Depreciation to date on building
$787,500/30 years	 = 	$26,250 per year
$26,250 x 3	 = 	$78,750 depreciation to date