Answer:
See below.
Explanation:
Assuming straight line depreciation method.
Depreciation for 2016 would be as,
Dep Expense 2016 = 364,000 - 14,000 / 25 = $14,000/year
Depreciation for 2017,
We assume that all the costs, the refinishing and painting and pollution devices were capitalized. This brought the total value of the building to
Building = 364,000 - 14,000 + 21,000 + 42,000 = $413,000
Since we have already subtracted depreciation for 2016 the new revised life of the building is = 25 - 1 + 6 = 30 years from 2017 on wards.
Dep expense for 2017 = 413,000 - 14,000 / 30 = $13,300/year
Loss on Building when sold = Sale price - Net book value in 2018
Loss = 392,000 - (413,000 - 13,300) = $7,700
Assuming full dep in year of purchase and no in year of sale.
Hope that helps.
