Question

A property's value is $125,000 and its land value is $10,000. Assuming a depreciation term of 35 years, what is the amount of annual depreciation?

A) $3,428.57
B) $2,857.14
C) $2,000
D) $1,428.57

Answer 1

To calculate the annual depreciation of the property, divide the difference between the property's value and land value by the depreciable term of 35 years. The correct answer is A) $3,428.57.

Step-by-step explanation:

To calculate the annual depreciation of the property, we need to divide the difference between the property's value and land value by the depreciable term of 35 years.

So, the annual depreciation would be: (Property Value - Land Value) / Depreciable Term = ($125,000 - $10,000) / 35 = $115,000 / 35 = $3,285.71 approximately.

Therefore, the correct answer is A) $3,428.57.