Question

Victor Mineli, the new controller of Pharoah Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2022. Here are his findings: Type of Asset Date Acquired Cost Accumulated Depreciation, Jan. 1, 2022 Useful Life (in years) Salvage Value Old Proposed Old Proposed Building Jan. 1, 2014 $728,500 $134,200 40 58 $57,500 $36,100 Warehouse Jan. 1, 2017 161,500 31,200 25 20 5,500 5,800 All assets are depreciated by the straight-line method. Pharoah Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Victor’s proposed changes. (The “Proposed” useful life is total life, not remaining life.)

Compute the revised annual depreciation on each asset in 2022. (Round answers to 0 decimal places, e.g. 125.) Building Warehouse Revised annual depreciation $enter a dollar amount $enter a dollar amount SHOW LIST OF ACCOUNTS

Prepare the entry to record depreciation on the building in 2022. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

a)	Building		Warehouse
Cost	$  728,500.00		$ 161,500.00
Less: Accumulated depreciation	$ (134,200.00)		$ (31,200.00)
Book value, 1/1/22	$  594,300.00		$ 130,300.00
Less: Salvage value (Proposed)	$   (36,100.00)		$   (5,800.00)
Depreciable cost (1)	$  558,200.00		$ 124,500.00
Revised remaining useful life in years (2) (58-8 = 50);(20 -5 =15)	50	years	15	years
Revised annual depreciation (1) ÷ (2)	$    11,164.00		$     8,300.00
b)
General Journal	Debit	Credit
Depreciation Expense	$    11,164.00
Accumulated Depreciation—Buildings		$ 11,164.00