In 1985, Abraham Company completed the construction of a building at a cost of $1,900,000 and first occupied it in January 1986. It was estimated that the building will have a useful life of 40 years and a salvage value of $60,000 at the end of that time.

Early in 1996, an addition to the building was constructed at a cost of $470,000. 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 $20,000.

In 2014, it is determined that the probable life of the building and addition will extend to the end of 2045 or 20 years beyond the original estimate.

 

(a) Using the straight-line method, compute the annual depreciation that would have been charged from 1986 through 1995.

 

$

 

(b) Compute the annual depreciation that would have been charged from 1996 through 2013.

 

$

 

(c) Is an entry necessary to adjust the account balances because of the revision of the estimated life in 2014?

 

 

 

(d) Compute the annual depreciation to be charged beginning with 2014.

 

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