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29 July, 14:13

A building acquired at the beginning of the year at a cost of $145,600 has an estimated residual value of $5,600 and an estimated useful life of 10 years. Determine the following:

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  1. 29 July, 16:30
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    Question: A building acquired at the beginning of the year at a cost of $145,600 has an estimated residual value of $5,600 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:

    (a) The depreciable cost is 140,000

    (b) The straight-line rate is 9.62%

    (c) The annual straight-line depreciation is $14000

    Explanation:

    (a) The depreciable cost = cost less residual value (145600 - 5600) = 140000

    (b) The straight-line rate = annual depreciation / cost * 100

    14000/145600 * 100 = 9.62%

    (c) The annual straight-line depreciation = depreciable cost / no. of years

    140000/10 = 14000
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