Final answer:
To estimate the total value of depreciation for XYZ Consulting's building up to 2014 using the US straight-line depreciation method, the cost basis is calculated, and annual depreciation is determined. The total depreciation incurred by April 2014 is calculated by multiplying the yearly depreciation by the number of years the building was in use.
Step-by-step explanation:
To calculate the depreciation using the US Straight Line Depreciation method for XYZ Consulting's building purchase, we will first determine the cost basis for the building. The cost basis includes the purchase price of $215,047 and the additional $29,996 spent on space adaptation, totaling $245,043.
The next step is to determine the expected salvage value and subtract it from the cost basis to find the total depreciable amount. XYZ Consulting forecasts a salvage value of $1,000,000 by the year 2040. However, the building will be sold in 2014, so this forecasted value does not impact the calculation.
The total depreciable amount over the useful life of the building will be the cost basis minus the salvage value. Since the building was put into service in June 2010 and will be sold in April 2014, it will have been used for 3 years and 10.5 months.
Assuming a 30-year useful life (which is typical for buildings), the annual depreciation expense is the depreciable amount divided by 30. To arrive at the total depreciation up to April 2014, we would multiply the yearly depreciation by 3.875 (3 years + 10.5 months/12 months). But since the salvage value forecast is for the year 2040 and irrelevant for the 2014 sale, we consider the annual depreciation over the expected life span with no salvage value.
The final calculation is as follows:
Total Cost Basis: $215,047 (purchase price) + $29,996 (adaptation) = $245,043
Annual Depreciation: $245,043 / 30 = $8,168.10
Total Depreciation (by April 2014): $8,168.10 × 3.875 = $31,651.39
Therefore, the total value of depreciation recorded in XYZ Consulting's accounting books by the time of the sale in 2014 is estimated to be $31,651.39.