On January 1, 2011, Jackson Company purchased a building and equipment that have the following useful lives,

Question:

On January 1, 2011, 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 2014. In 2015, 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.

Instructions

(a) Prepare the journal entry (ies) necessary to record the depreciation expense on the building in 2015.

(b) Compute depreciation expense on the equipment for 2015?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...