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Ray Mound is considering building Ray's Roundup Motel, and he is interested in his future costs and expenses. The building itself will cost $750,000 and will be in use for 20 years. Ray will need equipment costing $90,000, which will last for 15 years. He estimates the equipment can be sold at the end of its life for $5,000.
Required:
Problem 1. For both the building and the equipment, calculate the depreciation expense for one year using the straight-line method.
Problem 2. Make separate entries to record the building and equipment depreciation expense at the end of the year.
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