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A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated residual value of $300,000 and an estimated useful life of 10 years. Determine the following. (a) The depreciable cost $fill in the blank 1 (b) The straight-line rate fill in the blank 2 % (c) The annual straight-line depreciation

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Answer:

(a) The depreciable cost

depreciable cost = purchase cost - salvage value = $1,450,000 - $300,000 = $1,150,000

(b) The straight-line rate

straight line depreciation rate = 100% / useful life = 100% / 10 years = 10% per year

(c) The annual straight-line depreciation

annual straight line depreciation expense = depreciable value x deprecation rate = $1,150,000 x 10% = $115,000

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