Computing Revised Straight-Line Depreciation

Jack Reese, the new controller of Muckenthaler Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2010. Here are his findings:
***I left out the warehouse in hopes I could figure that out on my own.

If the building was acquired on Jan 1 2002, cost 941,660, has an accumulated depreciation of 191,890, originally had a "useful life" of 40 yrs, and salvage of 46,540...and Jack proposes the new "useful life of 50 with a NEW salvage value of 36,730 then how do I calculate the following 1,2,3, problems? Is the purchase date relevant?

NOTE***All assets are depreciated by the straight-line method. Muckenthaler Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Jack's proposed changes. (The "Proposed" useful life is total life, not remaining life.) Compute the revised annual depreciation on each asset in 2010. (Round to 0 decimal places, i.e. 2,350.)

1) What would be the REVISED annual depreciation for (building) asset 2010?

2) What would be the depreciation expense on the building for 2010?

3) What would the accumulated depreciation be on the building for 2010?

Solution Summary

This solution describes how to compute straight-line depreciation if the useful life and salvage value are revised, and what the new annual and accumulated depreciation would be.