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    E1-16 Lindy Rig, the new controller of Bellingham Company, has reviewed the expected useful
    lives and salvage values of selected depreciable assets at the beginning of 2002. Her findings
    are as follows.

    Useful Life Accumulated
    in Years Salvage Value Type of Date Depreciation
    Asset Acquired Cost 1/1/02 Old Proposed Old Proposed
    Building 1/1/96 $800,000 $114,000 40 50 $40,000 $70,000
    Warehouse 1/1/99 100,000 11,400 25 20 5,000 3,600
    All assets are depreciated by the straight-line method. Bellingham Company uses a calendar
    year in preparing annual financial statements. After discussion, management has agreed to accept
    Lindy's proposed changes.

    Instructions Using Microsoft Excel
    (a) Compute the revised annual depreciation on each asset in 2002. (Show computations.)
    (b) Prepare the entry (or entries) to record depreciation on the building in 2002.

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    Solution Summary

    This shows how to compute and prepare entries for annual depreciation.