Reference no: EM132758077

In 1993, Marigold Company completed the construction of a building at a cost of $2,080,000 and first occupied it in January 1994. It was estimated that the building will have a useful life of 40 years and a salvage value of $62,400 at the end of that time.

• Early in 2004, an addition to the building was constructed at a cost of $520,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $20,800.
• In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.

Problem a) Using the straight-line method, compute the annual depreciation that would have been charged from 1994 through 2003. Annual depreciation from 1994 through 2003: $ / yr.

Problem b) Compute the annual depreciation that would have been charged from 2004 through 2022. Annual depreciation from 2004 through 2021: $ / yr.

Problem c) Prepare the entry, if necessary, to adjust the account balances because of the revision of the estimated life in 2021.