Exercise 9-6 (Part Level Submission) Type of Date Accumulated Depreciation, Usef

Question

Exercise 9-6 (Part Level Submission)

Type of

Date

Accumulated
Depreciation,

Useful Life (in years)

Salvage Value

Asset

Acquired

Cost

Jan. 1, 2017

Old

Proposed

Old

Proposed

(a)

Building

Warehouse

Exercise 9-6 (Part Level Submission)

Victor Mineli, the new controller of Oriole Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. Here are his findings:

Type of

Date

Accumulated
Depreciation,

Useful Life (in years)

Salvage Value

Asset

Acquired

Cost

Jan. 1, 2017

Old

Proposed

Old

Proposed

Building Jan. 1, 2009 $975,500 $183,700 40 48 $57,000 $35,300 Warehouse Jan. 1, 2012 125,000 23,960 25 20 5,200 4,900
All assets are depreciated by the straight-line method. Oriole 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.)

Explanation / Answer

Revised annual depreciation of building = (975500-183700-35300)/40 = 18913

Revised annual depreciation of warehouse = (125000-23960-4900)/15 = 6409

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