Hutt Company purchased a building 12 years ago at a price of $850,000. At that time, useful life was estimated at 25 years with a $175,000 salvage value, and straight-line depreciation was used. After recording depreciation for the 12th year, Hutt decided that for future years it would revise its original estimate of the building’s useful life from 25 to 39 years and salvage value from $175,000 to $150,000.
Calculate the depreciation expense that Hutt should record for each of the remaining years of the building’s life.
Leavy Corporation owns a delivery van with an original cost of $36,500 and accumulated depreciation of $28,000. Determine the amount of gain or loss on the sale of the van under each of the following situations:
A. The van is sold for $10,000 cash.
B. The van is sold for $8,000 cash.
C. The van is sold for $2,000 cash plus a six-month $7,000 note receivable with a stated 8 percent interest rate.
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