Crane began operations on October 1, 2025. The company acquired a building on that date for $614000. The useful life of the building is 25 years and the salvage value is $58600. This is Crane only building . If the company uses straight-line depreciation, the balance in the Accumlated Depreciation-Building account after adjusting entries at December 31,2006 should be



Answer :

Answer:

To determine the balance in the Accumulated Depreciation-Building account for Crane at December 31, 2026, we need to follow these steps:

1. **Calculate the annual depreciation expense using the straight-line method:**

  \[

  \text{Annual Depreciation Expense} = \frac{\text{Cost of the Building} - \text{Salvage Value}}{\text{Useful Life}}

  \]

2. **Determine the total depreciation for the period from October 1, 2025, to December 31, 2026:**

  - First, calculate the depreciation for the year 2025 (from October 1 to December 31).

  - Then, calculate the depreciation for the full year 2026.

### Step-by-Step Calculation

**1. Calculate the annual depreciation expense:**

\[

\text{Annual Depreciation Expense} = \frac{614,000 - 58,600}{25} = \frac{555,400}{25} = 22,216

\]

**2. Calculate the depreciation for the partial year 2025:**

The building was acquired on October 1, so the depreciation for 2025 will be for 3 months (October, November, December).

\[

\text{Depreciation for 2025} = \text{Annual Depreciation Expense} \times \frac{3}{12} = 22,216 \times \frac{3}{12} = 5,554

\]

**3. Calculate the depreciation for the full year 2026:**

\[

\text{Depreciation for 2026} = \text{Annual Depreciation Expense} = 22,216

\]

**4. Determine the total accumulated depreciation as of December 31, 2026:**

\[

\text{Total Accumulated Depreciation} = \text{Depreciation for 2025} + \text{Depreciation for 2026} = 5,554 + 22,216 = 27,770

\]

Therefore, the balance in the Accumulated Depreciation-Building account after adjusting entries at December 31, 2026, should be **$27,770**.

Explanation:

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