Revision of Depreciation A warehouse with a cost of $627,200 has an estimated re

Question

Revision of Depreciation A warehouse with a cost of $627,200 has an estimated residual value of $67,200, has an estimated useful life of 20 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. b. Determine the book value after 7 full years of use. c. Assuming that at the start of year 8 the remaining life is estimated to be 16 years and the residual value is estimated to be $64,800, determine the depreciation expense for each of the remaining 16 years

Explanation / Answer

Part - a

Straight line depreciation = Cost - scrape / life = (627200 - 67200) / 20 years

= 560,000 / 20 = 28000 .......final answer

Part - b

After 7 seven years, we have 7 * 28000 = 196.000 depreciation is totally provided on the said asset.

So book value = 627200 - 196000 = 431,200..................final answer

Part - c

When ever the lfie of the asset is revised, we have to revise the amount of depreciation chargeble over the remaining useful life prospectively.

(431200 - 64800) / 16 years = 22900 ............final answer

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.