Revision of depreciation A building with a cost of dollar 1, 200,000 has an esti

Question

Revision of depreciation A building with a cost of dollar 1, 200,000 has an estimated residual value of dollar 250,000. has an estimated useful life of 40 years and is depreciated bv the straight-line method What is the amount of the annual depreciation? What is the book value at the end of the twenty-eighth year of ? If at the start of the twenty-ninth year it is estimated that the remaining life is 10 years and that the residual value is dollar 180,000 what is the depreciation expense for each

Explanation / Answer

a. Amount of the annual depreciation = (1200000 - 250000) / 40 = $23750 pre annum

b. Book value at the end of 28th year = 1200000 - (23750 * 28) = $535000

c. After 28th year and beginning of 29th year, if the remaining life is 10 years and residual value is $180000, the the depreciation per annum for further 10 years =( $535000 - $180000) / 10 = $35500 per annum

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