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:
Cost Useful Life Residual Value Depreciation
Building $2,550,000 20 years $510,000 Double Declining
Equipment $1,060,000 25 years $106,000 Straight-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

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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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	Cost	Useful Life	Residual Value	Depreciation
Building	$2,550,000	20 years	$510,000	Double Declining
Equipment	$1,060,000	25 years	$106,000	Straight-Line