Valix Finacc vol 1 Problem 16-20

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 16 Problem 16-20

a.  Annual depreciation (8,400,000 / 30)                                                                    280,000

      Age of building (7,000,000 / 280,000)                                                                   25 years

b.  Building                                                                                      2,500,000

            Cash                                                                                                            2,500,000

c.  Building (8,400,000 + 2,500,000)                                                                         10,900,000

     Less: Accumulated depreciation                                                                      7,000,000

     Book value                                                                                                         3,900,000

d.  Depreciation (3,900,000 / 15)                                                        260,000

            Accumulated depreciation                                                                           260,000

      Original life                                                                                                                              30

      Less: Expired life                                                                                                           25

      Remaining useful life, beginning of current year                                                           5

      Add: Extension in life                                                                                                   10

      Revised useful life                                                                                                        15