Bill Simpson, the new controller of Bellingham Company, has reviewed the exExercises 437 Compute revised annual pected useful lives and salvage values of selected depreciable assets at the beginning of depreciation.

2001. Here are his findings:

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 Bill's proposed changes. (The “Proposed” useful life is total life, not remaining life.)
Instructions

(a) Compute the revised annual depreciation on each asset in 2001. (Show computations.)

(b) Prepare the entry (or entries) to record depreciation on the building in 2001.

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Accumulated Type of Asset Date Acquired Depreciation, Cost Jan. 1, 2001 Useful Life (in years) Old Proposed Old Salvage Value Proposed Building Jan. 1, 1995 $800,000 $114,000 40 50 $40,000 $48,000 Warehouse Jan. 1, 1998 100,000 11,400 25 20 5,000 3,600