Will Smith, the new controller of Fresh Prince Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2007. Here are his findings:

Exercises 457 Determine acquisition costs of land.

(SO 1)

Determine straight-line depreciation for partial period.

(SO 3)

Compute revised annual depreciation.

(SO 3,4)

Accumulated Useful Life Type of Date Depreciation, (in_years) __ Salvage Value __ Asset Acquired Cost Jan. 1, 2007 Old Proposed Old Proposed Building Jan. 1, 1999 $900,000 $172,000 40 50 $40,000 $47,600 Warehouse Jan. 1, 2001 120,000 27,600 25 20 5,000 3,600 All assets are depreciated by the straight-line method. Fresh Prince Company uses a calendar year in preparing annual financial statements. After discussion, management has agreed to accept Will's proposed changes. (The “Proposed” useful life is total life, not remaining life.)

Instructions

(a) Compute the revised annual depreciation on each asset in 2007. (Show computations.)

(b) Prepare the entry (or entries) to record depreciation on the building in 2007.