Reference no: EM132969749

Problem 1: Using the following information, record the necessary adjusting journal entries ended December 31st 2021.

Due to tax purposes, the company changes (1) depreciation method for building ($100,000,000) from double-declining to straight, and (2) salvage value from $25,000,000 to $900,000. Tax rate is 20% for all years. Balances in the deferred tax asset and deferred tax liability accounts at January 1, 2021, were $3,500,000, and $270,000 (1,350,000*20%). Expenses include $2,000,000 for life insurance on key executives.

• Income before income tax- $1,500,000
• The building was originally acquired on 1/1/18 for $100,000,000, with a salvage of $25,000,000 and a useful life of 25 years. The accumulated depreciation as of 12/31/21, using the double-decline method, is $28,360,704.