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On January 1, 2019, Pronghorn Corporation purchased a building to use as its factory, and some...

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Accounting

On January 1, 2019, Pronghorn Corporation purchased a buildingto use as its factory, and some equipment to manufacture itsproduct. The following information was determined at the time ofpurchase:

CostUseful LifeResidual ValueDepreciation
Building$2,550,00020 years$510,000Double Declining
Equipment$1,060,00025 years$106,000Straight-Line


On January 1, 2022, Pronghorn decided to change the depreciationmethod for the building to the straight-line method, as a result ofa change in the pattern of benefits received. There was no changeto the total useful life or the residual value of thebuilding.

Pronghorn also decided that the equipment would have a total usefullife of only 13 years, with a residual value of only $55,000. Thedepreciation method for the equipment did not change. Prepare thejournal entries to record depreciation for both assets for 2022

Answer & Explanation Solved by verified expert
4.4 Ratings (867 Votes)
journal entry for depreciation of building on 31dec2022 is Depreciation ac Dr 67448 To building ac 67448 journal entry for depreciation of equipment on 31dec2022 is Depreciation ac Dr 68502 To building ac 68502 Explanation Firstly we need to arrive at carrying amount at 01 January 2022 for building and equipment because i for building there is a change in depreciation method when will rise to prospective effect ii for equipment there is change in estimated residual value and life of the asset Calculation of carrying    See Answer
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