Revision of De A building with a cost of $480,000 has an estimated residual valu

Question

Revision of De A building with a cost of $480,000 has an estimated residual value of $192,000, has an estimated u life of 36 years, and is depreciated by the straight-line methocd a. What is the amount of the annual depreciation? b. What is the book value at the end of the twentieth year of use? c. If at the start of the twenty-first year it is estimated that the remaining life is 20 years and that the residual value is $140,000, what is the depreciation expense for each of the remaining 20 years?

Explanation / Answer

Annual depreciation=(Cost-Salvage value)/USeful life

1.Annual depreciation=(480,000-192000)/36=$8000/year

2.Book value at end of 20th year=Cost-Accumulated depreciation

=480,000-(20*8000)=$320,000

3.Revised  depreciation=(320,000-140,000)/20=$9000.

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