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 million. $9 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 million residual value. In 2016, the estimates of useful life and residual value were changed to 20 years and $500,000, respectively.

What is depreciation on the building for 2016?

At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $12 million. $9 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 million residual value. In 2016, the estimates of useful life and residual value were changed to 20 years and $500,000, respectively.

Explanation / Answer

Depriciation For 2014 = (9-1)/25

= 0.32 million

Depriciation For 2015 = (9-1)/25

= 0.32 million

Accumulated Depriciation at the end of 2015: 0.64 million

Depriciation For 2015 =(9,000,000-640,000-500,000)/20

=$393,000

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