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    Sauder Company: Accounting Changes Regarding Depreciation Method

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    On January 1, 2003, Sauder Company purchased a building and machinery that have the following useful lives, salvage value, and costs.
    *Building, 25-year estimated useful life, $400,000 cost, $400,000 salvage value
    *Machinery, 10-year estimated useful life, $500,000 cost, no salvage value.
    The building has been depreciated under the straight-line method through 2007. In 2008, the company decided to switch to the double-declining balance method of depreciation for the building. Sauder also decided to change the total useful life of the machinery to 8 years, with a salvage value of $25,000 at the end of that time. The machinery is depreciated using the straight-line method.

    a.) Prepare the journal entry necessary to record the depreciation expense on the building in 2008.
    b.) Compute depreciation expense on the machinery for 2008.

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    Solution Summary

    The solution discusses accounting changes regarding depreciation methods.