asign in to XFINITY WFi RegistrationDetails Intex-Mch 11 Homework x.gchegg Study

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asign in to XFINITY WFi RegistrationDetails Intex-Mch 11 Homework x.gchegg Study C ezto.mheducation.com/hm.tpx ACCOUNTING Ch. 11 Homework 4. 10.00 points Funseth Company purchased a five-story office building on January 1, 2014, at a cost of $9,200,000 The bulding has a residual value of $550,000 and a 40-year life. The straight-line depreciation method is used On June 30, 2016, construction of a sixth floor was completed at a cost of $2,625,000 Required: Calculate the depreciation on the building and building adition for 2016 and 2017 assuming that the addition did not change the life or residual value of the building 2016 $ 2017 s Ditfieuity:2 Medium esc 2 4 5 6

Explanation / Answer

Building depreciation per year = (Cost - residual value) / useful life = ($92,00,000 - $5,50,000)/40 years Building depreciation per year = $2,16,250 Addition to building was completed on June 30,2016 , hence for 2016 depreciation on addition to building should be considered for half year. Depreciation on Building addition for 2016 = [Cost addition / Remaining useful life]/2 = [$26,25,000 / 37.5 years]/2 = $35,000 Depreciation on Building addition for 2017 = $70,000

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