Question

Revision of Depreciation A building with a cost of $570.000 has an estimated residual value of $220,000, has an estimated useful life of 18 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 tenth year of use? c. If at the start of the eleventh year it is estimated that the remaining life is 10 years and that the residual value is $160,000, what is the depreciation expense for each of the remaining 10 years? olo AliExpress It's Singles Day! Check My Work Start shopping! O e AD do 2.50 PM 11/10/2019

Answer 1

Answer

• All working forms part of the answer

A	Original cost	$                  570,000
B	Original salvage value	$                  228,000
C = A - B	Original depreciable base	$                  342,000
D	Original expected life [years]	18
E = C/D	Annual 12 month depreciation	$                     19,000 ANSWER [a]
F = E x 10 years	Total Accumulated Depreciation till estimates changed	$                  190,000
G = A - F	Book Value at the end of Year #10	$                  380,000 [ANSWER [b]]
H	New salvage value	$                  160,000
I = G - H	New depreciable base	$                  220,000
L	Remaining life	10
M = I/L	Revised depreciation expense	$                     22,000 ANSWER [c]

• Requirement [a] = $ 19,000
• Requirement [b] = $ 380,000
• Requirement [c] = $ 22,000