Question

Leslie, Inc., followed the practice of depreciating its building on a straight-line basis. A building was purchased in 2016 and had an estimated useful life of 25 years and a residual value of $20,000. Page 428 The company's depreciation expense for 2016 was $15,000 on the building. What was the original cost of the building?

Answer 1

Answer:

Original Cost of building=$395000

Step-by-step explanation:

Formula:

Straight line depreciation Expense=Depreciable amount/Useful life of asset

In our Case:

Depreciable amount is not given

Depreciable expense=$15000

Useful life of asset =25 years

Using aboe formula depreciable amount can be calculated as:

Depreciable amount= Depreciation Expense* Useful life of asset

Depreciable amount=$15000*25

Depreciable amount=$375000

In order to calculate the original cost we also have to include residual cost in depreciable amount.

Original Cost of building=Depreciable amount + Residual Cost

Original Cost of building=$375000+$20000

Original Cost of building=$395000