Question

1. On January 1, 2014, Jackson Company purchased a building and equipment that have the following useful lives, salvage values, and costs. Building, 40-year estimated useful life, \(50,000 salvage value, \)800,000 cost Equipment, 12-year estimated useful life, \(10,000 salvage value, \)100,000 cost The building has been depreciated under the double-declining-balance method through 2017. In 2018, the company decided to switch to the straight-line method of depreciation. Jackson also decided to change the total useful life of the equipment to 9 years, with a salvage value of $5,000 at the end of that time. The equipment is depreciated using the straight-line method.
2. Instructions (a) Prepare the journal entry(ies) necessary to record the depreciation expense on the building in 2018.
3. (b) Compute depreciation expense on the equipment for 2018.

Short answer

The revised depreciation expense on the building is $16,711 and on equipment is $13,000.

Step-by-step solution

Journal Entry for Part A

Year	Beg Value	Depreciation ($)	Acc Depreciation ($)	Book Value
2014	800,000	40,000	40,000	760,000
2015	760,000	38,000	78,000	722,000
2016	722,000	36,100	114,100	685,900
2017	685,900	34,295	148,395	651,605

$$\begin{gathered} RevisedDepreciationexpense=\frac{DepreciableCost}{Remainglife} \\ =\frac{651,605-50,000}{36} \\ =\$16,711 \end{gathered}$$

Date	Particulars	Debit ($)	Credit ($)
	Depreciation expense-Building	16,711
	Accumulated Depreciation - Building		16,711
	(being revised depreciation recorded)

Calculation of depreciation equipment

Date	Particulars	Debit ($)	Credit ($)
	Depreciation expense-Building	16,711
	Accumulated Depreciation - Building		16,711
	(being revised depreciation recorded)

Step 2: Calculation of depreciation equipment

Year

Beg Value

Depreciation ($)

Acc Depreciation ($)

Book Value