On January 1, 2010, Powell Company Purchased a Building and Machinery

Essay

On January 1, 2010, Powell Company purchased a building and machinery that have the following useful lives, salvage value, and costs.Building, 25-year estimated useful life, $6,000,000 cost, $600,000 salvage valueMachinery, 10-year estimated useful life, $800,000 cost, no salvage valueThe building has been depreciated under the straight-line method through 2014. In 2015, the company decided to switch to the double-declining balance method of depreciation for the building. Powell also decided to change the total useful life of the machinery to 8 years, with a salvage value of $40,000 at the end of that time. The machinery is depreciated using the straight-line method.
Instructions
(a) Prepare the journal entry necessary to record the depreciation expense on the building in 2015.
(b) Compute depreciation expense on the machinery for 2015.