On January 1 2007 Powell Company purchased a building and machinery that have

On January 1 2007 Powell Company purchased a building and machinery that have the following useful

lives residual value and costs.

Building 25-year estimated useful life $4000000 cost $400000 residual value

Machinery 10-year estimated useful life $500000 cost no residual value

The building has been depreciated under the straight-line method through 2011. In 2012 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 residual value of
$25000 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 2012.

(2 marks)

(b) Compute depreciation expense on the machinery for 2012. (2 marks)