Question

A building acquired at the beginning of the year at a cost of $107,100 has an estimated residual value of $4,100 and an estimated useful life of 10 years. Determine the following:

a. The depreciable cost $
b. The straight-line rate %
c. The annual straight-line depreciation $

Answer 1

a. $103,000

b. 10%

c. $10,300

Step-by-step explanation:

In this question, the straight line method used.

The calculations are shown below:

a. . The depreciable cost would be

= Acquired cost of building - estimated residual value

= $107,100 - $4,100

= $103,000

b. The straight-line rate would be

= Percentage ÷ estimated useful life

= 100% ÷ 10 years

= 10%

c. The annual straight-line depreciation would be

= Depreciable cost × straight-line rate

= $103,000 × 10%

= $10,300