Question

In 2000, Paradise Condo Inc. bought a new apartment building that was rented out to families on June 21st, 2000. The purchase cost was 579,860 dollars and in addition it had to spend 11,680 dollars remodeling the space. Paradise Condo estimated that in 2030 the building would have a net salvage value of $100,000. Using the US Straight Line Depreciation Schedule, compute the value of depreciation recorded in the accounting books in the year 2000. (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas)

Answer 1

Depreciation for the period Jun 21 - December 31 = 8,708.56

Step-by-step explanation:

Computation of depreciation cost

Purchase cost of building 579,860

Remodelling costs 11,680

Less: Salvage Value (100,000)

Depreciable costs 491,540

Estimated useful life 30 years

Depreciation per year 491,540/ 30 16,384.67

Depreciation for the period Jun 21 - December 31

June 10 days

July - December 184 daya

Total days depreciation 194 days

Depreciation expense for the period =16,384.67/365 * 194 = 8708.56