Cara, Inc.purchased a building on January 1, 2011 for ₤ 500,000.The useful life of the building is 10 years.What impact will the appropriate adjusting entry at December 31, 2011 have on its statement of financial position at December 31, 2011?

Question

Quizplus · Accepted Answer

The appropriate adjusting entry at December 31, 2011 for the building would be to record depreciation expense of ₤ 50,000 (₤ 500,000/10 years). This would result in a decrease in the carrying value of the building by ₤ 50,000, thus decreasing the Assets by ₤ 50,000 on the statement of financial position at December 31, 2011.

Cara, IncPurchased a Building on January 1, 2011 for ₤ 500,000