Reference no: EM132694551

On January 1, 2016, Karen Company purchased a building and machinery have the following useful lives, salvage value, and costs.

• Building, 25-year estimated useful life, $8,290,000 cost, $829,000 salvage value
• Machinery, 10-year estimated useful life, $1,570,000 cost, no salvage value

The building has been depreciated under the straight-line method through 2020. In 2021, the company decided to switch to the double-declining balance method of depreciation for the building. Karen also decided to change the total useful life of the machinery to 8 years, with a salvage value of $78,500 at the end of that time. The machinery is depreciated using the straight-line method.

Problem 1: Prepare the journal entry necessary to record the depreciation expense on the building in 2021. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

Depreciation Expense 679,780

Accumulated Depreciation-Building 679,780

Problem 2: Compute depreciation expense on the machinery for 2021.