Question

Sep.​ 1: Sold a building that cost $ 540 comma 000 ​(accumulated depreciation of $ 275 comma 000 through December 31 of the preceding​ year). Guilda Bell Associates received $ 340 comma 000 cash from the sale of the building. Depreciation is computed on a​ straight-line basis. The building has a​ 40-year useful life and a residual value of $ 75 comma 000. Before we record the sale of the​ building, we must record depreciation on the building through September​ 1, 2018.

Answer 1

$8,718.75

Step-by-step explanation:

Depreciation is the systematic allocation of the cost of an asset to the income statement over the estimated useful life of that asset.

It is determined as the depreciable value of the asset over the estimated useful life of the asset where the depreciable value is the difference between the cost and salvage value of the asset

Mathematically,

Depreciation = (Cost - Salvage value)/Estimated useful life

Annual depreciation

= (540,000 - 75,000)/40

= $11,625

Depreciation between 1 January and 1 September 2018 (9 months)

= 9/12 * $11,625

= $8718.75