WholesaleWholesale Hardware Consultants purchased a building for $ 495 comma 000

Question

WholesaleWholesale Hardware Consultants purchased a building for $ 495 comma 000$495,000 and depreciated it on a straight-line basis over a 3535-year period. The estimated residual value is $ 110 comma 000$110,000. After using the building for 15 years, WholesaleWholesale realized that wear and tear on the building would wear it out before 3535 years and that the estimated residual value should be $ 94 comma 000$94,000. Starting with the 16th year, WholesaleWholesale began depreciating the building over a revised total life of 2525 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Explanation / Answer

Journalize depreciation expense on the building for years 15 and 16.

Date account and explanation debit credit Year 15 Depreciation expense (495000-110000/35) 11000 Accumlated depreciation 11000 (To record depreciation expense) Year 16 Depreciation expense (495000-165000-94000)/10 23600 Accumlated depreciation 23600 (To record depreciation expense)

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