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A building with a cost of $1,800,000 has an estimated residual value of $125,000, has an estimated useful life of 40 years, and is depreciated by the straight-line method. a. What is the amount of the annual depreciation?

Respuesta :

Answer:

$41,875

Extra

a. $17,250 [($780,000 – $90,000) Γ· 40]

b. $366,000 [$780,000 – ($17,250 Γ— 24 yrs.)]

c. $29,600 [($366,000 – $70,000) Γ· 10 yrs.]

Step-by-step explanation:

Step 1: Determine the cost of the asset

[tex]1,800,000[/tex]

Step 2: Subtract the estimated salvage value of the asset from the cost of the asset to get the total depreciable amount

[tex]1,800,000 - 125,000[/tex]

Step 3: Determine the useful life of the asset

[tex]40[/tex]

Step 4: Divide the sum of step (2) by the number arrived at in step (3) to get the annual depreciation amount

[tex]$41,875[/tex]

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