At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $1

Question

At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $12.5 million. $9.5 million of the purchase price was allocated to the building. Depreciation for 2014 and 2015 was calculated using the straight-line method, a 25-year useful life, and a $1.5 million residual value. In 2016, the estimates of useful life and residual value were changed to 20 years and $550,000, respectively. What is depreciation on the building for 2016? (Enter your answer in whole dollars.) Depreciation

Explanation / Answer

Calculate Depreciation expense :

Building purchase price = 9500000

2014 and 2015 dep = (9500000-1500000/25) = 320000 per year

2016 Depreciation = (9500000-550000-640000)/18 = $461667

So Depreciation expense for 2016 = $461667

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