Final answer:
a. The annual depreciation charged from 1999 to 2008 using the straight-line method is $49,125. b. The annual depreciation charged from 2008 through 2026 is $82,333.33. c. The annual depreciation charged beginning with 2027 is $27,444.44.
Step-by-step explanation:
a. To compute the annual depreciation from 1999 to 2008 using the straight-line method, we first need to calculate the depreciable cost of the building. The depreciable cost is the original cost minus the salvage value. In this case, the depreciable cost is $2,025,000 - $60,000 = $1,965,000. The useful life of the building is 40 years, so the annual depreciation can be calculated as the depreciable cost divided by the useful life.
Annual depreciation = Depreciable cost / Useful life = $1,965,000 / 40 = $49,125
b. To compute the annual depreciation from 2008 through 2026, we need to consider the addition to the building as well. The depreciable cost of the addition is $505,000. The total depreciable cost is the sum of the depreciable cost of the building and the depreciable cost of the addition.
The remaining useful life of the building is 30 years, so the annual depreciation can be calculated as the total depreciable cost divided by the remaining useful life.
Total depreciable cost = Depreciable cost of building + Depreciable cost of addition = $1,965,000 + $505,000 = $2,470,000
Annual depreciation = Total depreciable cost / Remaining useful life = $2,470,000 / 30 = $82,333.33
c. To compute the annual depreciation beginning with 2027, we need to adjust for the extension of the building's life. The remaining useful life of the building and addition is now 20 years beyond the original estimate, so the new remaining useful life is 40 + 30 + 20 = 90 years.
The total depreciable cost remains the same at $2,470,000. The annual depreciation can be calculated as the total depreciable cost divided by the new remaining useful life.
Annual depreciation = Total depreciable cost / New remaining useful life = $2,470,000 / 90 = $27,444.44