Question

In 1993, Nash Company completed the construction of a building at a cost of $2,040,000 and first occupied it in January 1994. It was estimated that the building will have a useful life of 40 years and a salvage value of $59,200 at the end of that time. Early in 2004, an addition to the building was constructed at a cost of $510,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $20,400. In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.

Compute the annual depreciation to be charged, beginning with 2022. (Round answer to 0 decimal places, e.g. 45,892.)

Answer 1

To 1993. Navb completed the conchuchon of the building & 2,040,000. 4o quers cost of Building in 1994 estimated usage life - Salvage Value - $ 59,200 In 2004 30 years Additional cost of Building - $ 510,000, Additional Cesage life = 420,400. Salon rale "estimated Depreciation - cost of Building - Salvage Value usage life Depreciation until 2003. per year Depreciatis &- p20 2,040,000 o 59,200 40 = 49,520 per year From 1994 2003 there are to year cost of Building - (2,040,000)-(49520 on 2004 XI 1,544,800 In 2004 - $ 510,000 Additional cost $1,544,800 = 2,054,800.4

Salvage Value - $79,600 Estimated life. Toys (40-10) +30) yn From 2004, the estimated life would be 2013th year. But in 2022, the life of building will be extended to 2003, con 20 years beyond estimated life If the life is up to 2053, hrom, 2004 the Estimated life would be 50 years. Annual deprenation = cost of Building osaluare estimated life = $ 2054800 0 79,600 50. = 439,504 from 2022 from 2022 The annual depreciation 45 9 39,504