Question

On March 31, 2018, Susquehanna Insurance purchased an office building for $14,400,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building Furniture and fixtures were purchased separately from office equipment on the same date for $1,280,000 and $780,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: Building Furniture and fixtures Office equipment Service Life 40 20 10 Residual Value 10% of cost 10% of cost $38,000 Required: Calculate depreciation for 2018 and 2019. (Do not round intermediate calculations.) Depreciation 2018 2019 162,000 $ Building Furniture and fixtures Office equipment

Answer 1

on the part of the land we will not charge depreciation. Building pootfon = 2/3 x 14,400,000 = $ 9,600,000 1 Office Fuonitude aceipment office Particular & beeilding Cost ca) 9,600,000 1,280,000 780,000 life (6) 40 I 20 10 Rate of depreciation 5% loy. 207. C=C100/b)*2 Depreciation for 2018 CC *a)-d 480,000 128.000 156.000 Vallee ar beginning - 2019 Cad-C 9,120,000 1,152.000 620.000 Depoeciarron for 2019 Cerc) .456,000 115,200 124,800 In the double deckening method of depreciation we don't subtract galvage value the defode, selvage og posidoeae valle does not efleco Calcolallon,