Journal Entry for the Year 2015:

a.

 

	Debit	Credit
Depreciation Expense-Equipment	51,000
Accumulated Depreciation- Equipment		51,000

b.

 

	Debit	Credit
Depreciation Expense-Building	16,856.76
Accumulated Depreciation-Building		16,856.76

Equipment

The sum-of-the-years'-digits (SYD) method is a form of accelerated depreciation.

The first thing you have to do is to come up with a multiplier. Use 15 as the denominator being the sum of the years' digit (5+4+3+2+1).

Then compute the depreciation for each year by multiplying to the depreciable cost with the fraction, the remaining useful life being the numerator and the sum of the years' digit as the denominator:

• 2012: 510,000 X (5 / 15) = 170,000
• 2013: 510,000 X (4 / 15) = 136,000
• 2014: 510,000 X (3 / 15) = 102,000

Therefore the accumulated depreciation of equipment at December 31, 2014 is 408,000

• 170,000 + 136,000 + 102,000 = 408,000

Therefore, the book value is 117,000.

• 525,000 - 408,000 = 117,000.

Since the method of depreciation was changed from SYD method to straight line method of depreciation while the useful life and salvage value remains the same,the depreciation expense for 2015 is:

• 102,000 / 2 = 51,000

Take note that 102,000 is the remaining depreciable cost computed as:

• 117,000 - 15,000 = 102,000

Building

Divide the depreciable amount of 693,000 by the useful life, 30, to come up with the annual depreciation:

• 693,000 / 30 = 23,100

Since the period covered from January 2012 to December 2014 is 3 years, multiply it by three:

• 23.100 * 3 = 69,300

Therefore, 69,300 is the accumulated depreciation.

The Book value then by the end of December 31, 2014 is

• 693,000 - 69,300 = 623,700

To come up with the depreciation expense for 2015, simply divide 623,000 with the remaining useful life of 37 years (the useful life had been changed from 30 to 40 years and the building was already used for a span of 3 years, = 37 years.)

• 623,700 / 37 = 16,856.76