A building with a cost of $270,000 has an estimated residual value of $54,000, h
ID: 2564767 • Letter: A
Question
A building with a cost of $270,000 has an estimated residual value of $54,000, has an estimated useful life of 18 years, and is depreciated by the straight-line method.
What is the amount of the annual depreciation?
$
b. What is the book value at the end of the tenth year of use?
$
c. If at the start of the eleventh year it is estimated that the remaining life is 10 years and that the residual value is $10,000, what is the depreciation expense for each of the remaining 10 years?
Revision of Depreciation A building with a cost of $270,000 has an estimated residual value of $54,000, has an estimated useful life of 18 years, and is depreciated by the straight-line method a. What is the amount of the annual depreciation? b. What is the book value at the end of the tenth year of use? c. If at the start of the eleventh year it is estimated that the remaining life is 10 years and that the residual value is $10,000, what is the depreciation expense for each of the remaining 10 years?Explanation / Answer
Answer a. Annual Depreciation = ($270,000 - $54,000) / 18 Years Annual Depreciation = $12,000 Answer b. Accumulated Depreciation Balance at the end of 10th Year = $12,000 X 10 Years Accumulated Depreciation Balance at the end of 10th Year = $120,0000 Book Value at the end of 10th Year = $270,000 - $120,000 Book Value at the end of 10th Year = $150,000 Answer c. Depreciation Expense = ($150,000 - $10,000) / 10 Years Depreciation Expense = $14,000
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