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nexus9112 [7]
3 years ago
14

In 1993, Sheffield Company completed the construction of a building at a cost of $2,340,000 and first occupied it in January 199

4. It was estimated that the building will have a useful life of 40 years and a salvage value of $69,600 at the end of that time.
Early in 2004, an addition to the building was constructed at a cost of $585,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $23,400.
In 2022, it is determined that the probable life of the building and addition will extend to the end of 2053, or 20 years beyond the original estimate.
Compute the annual depreciation to be charged, beginning with 2022. (Round answer to 0 decimal places)
Annual depreciation expense—building ___________
Business
1 answer:
erastova [34]3 years ago
5 0

Answer:

Annual depreciation expense is $23,547

Explanation:

In the year 2022 the cost of the building will be written down value.

Using straight line depreciation method :  (Cost - Salvage value ) / Useful life

Depreciation in 1994 = ( 2,340,000 - 69,600 ) / 40 years = 56,760

There is addition construction in year 2004 the carrying value of the building will be :

2,340,000 - ( 56,760 * 20 ) = 1,204,800

Depreciation in 2004 : ( 1,204,800 + 585,000 ) - 23,400 / 30 years = 58,880

Carrying value on 2022 :

1,789,800 - ( 58,880 * 18 years) = 729,960

Depreciation expense in 2022:

729,960 / 31years = $23,547

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you should accept the payments because they are worth $56,451.91 today

Explanation:

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3 years ago
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8 0
3 years ago
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December i think, pretty sure i guess
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3 years ago
Read 2 more answers
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