At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $1

Question

At the beginning of 2014, Robotics Inc. acquired a manufacturing facility for $13.4 million. $10.4 million of the purchase price was allocated to the building. Depreciation for 2014 and 2015 was calculated using the straight-line method, a 25-year useful life, and a $2.4 million residual value. In 2016 the company switched to the double-declining-balance depreciation method. What is depreciation on the building for 2016? (Do not round intermediate calculations. Enter your answer in whole dollars.)

Explanation / Answer

Straight line depriciation for 2 years=[(10.4-2.4)/25 years]×2 years

=.64 million

Undepriciated cost after 2 years=10.4 -.64

=$9.76 million

Remains useful life=25-2=23 years

Double declining depriciation on building for 2016=$9.76 ×2/23

=$.848696 million or $848,696

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