Revision of Depreciation
A building with a cost of $675,000 has an estimated residual value of $270,000, has an estimated useful life of 27 years, and is depreciated by the straight-line method.
a. What is the amount of the annual
depreciation?
$
b. What is the book value at the end of the
fifteenth year of use?
$
c. If at the start of the sixteenth year it is
estimated that the remaining life is 15 years and that the residual
value is $195,000, what is the depreciation expense for each of the
remaining 15 years?
$
a | ||
Cost | 675000 | |
Less: Residual value | 270000 | |
Depreciable cost | 405000 | |
Divide by Useful life | 27 | |
Annual depreciation | 15000 | |
b | ||
Cost | 675000 | |
Less: Accumulated depreciation | 225000 | =15000*15 |
Book value at the end of the fifteenth year | 450000 | |
c | ||
Book value at the end of the fifteenth year | 450000 | |
Less: Residual value | 195000 | |
Depreciable cost | 255000 | |
Divide by Useful life | 15 | |
Depreciation expense for remaining 15 years | 17000 |
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