I have a balance sheet that currently states fixed assets as 200,000.

After speaking with a client I find out that the original cost of these fixed assets was $150,000 ten years ago and it is in its final year of useful life. It's estimated replacement cost is 200,000. The equipment has been depreciated using the straight line method.

First of all, my dumb mother effing teacher never taught us different depreciation methods. I looked it up in my textbook and it seems that I need to know a Salvage Value to compute the depreciable cost. The teacher did not give us any salvage value??
So anyway, I need to correct the balance sheet with the given information.

My balance sheet is balanced right now with Fixed Assets set at 200,000 so anything I change it to will screw up my Liabilities and SE side. HELPPP PLEASE! THANK YOU

Not sure what you are asking..

But first, how did they increase their assets?

If all fixed assets on the books are from 10 years ago that cost 150K, that should be the value, no replacement cost. There should also be accumulated Amortization as well.

Second, as for depreciation, how has the company been depreciating the assets in previous years?

My assignment was to correct a balance sheet after "learning" additional information about the company. One of the them was this:

Fixed Assets consists of equipment originally purchased in 1997 for $150,000. The estimated cost to replace this equipment is $200,000. The equipment has been depreciated using the straight-line method and is in its final year of useful life (it is now dec 31 2007).

That is all the teacher gave us on that problem. The balance sheet he gave us says fixed assets is $200,000. I have to adjust that somehow and I don't know how. He gave us no depreciation value or expense amount. So, I don't know how it's possible...

HOPE THIS MAKEs MORE SENSE.

You know that you have 150,000 in FA, bought in 1997.

You have been depreciating it, and you are in the final year of depreciation.

Therefore, after this year, Accumulated Amortization = Fixed Assets. Therefore, your Book Value should be 0.

Balance Sheet
Fixed Assets 150,000
Less: Accum Amort 150,000
NBV 0

As for the adjusting entry for this year….

150,000 / 10 = 15,000 x .5 = 7,500

Assuming no salvage value

10 year useful life as follows:
1997, 98, 99, 00, 01, 02, 03, 04, 05, 06. 07 (told 07 is final year, 97 and 07 are half years though)

Dr. Depreciation Expense 7,500
Cr. Accum Dep 7,500