Question

The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a remaining life of 10 years. Based on this information, the accountant should____________

Answer 1

The accountant should adjust the depreciation expense to reflect the new remaining life of 10 years.

Step-by-step explanation:

The accountant should adjust the depreciation expense to reflect the new remaining life of 10 years.

To calculate the new depreciation expense, we can use the straight-line method. The remaining depreciable cost would be the original cost minus the accumulated depreciation for the first 30 years. Then, we divide this remaining cost by the new remaining life of 10 years.

For example, if the original cost of the building was $500,000 and the accumulated depreciation after 30 years was $300,000, then the remaining depreciable cost would be $500,000 - $300,000 = $200,000. The new annual depreciation expense would be $200,000 ÷ 10 = $20,000.