1. An hotel compnay is purchasing a lot for $350k and plans to built a 5-story $8.5 million hotel on it. The furinute for equippingthis hotel is estimated at $750,000. They plan to put the hotel in service on May 10th 2018. Develop a depreciation table for this property (building+furniture) for the first 7 calendar years of operation. 2. The same hotel company will sell the hotel on June 15th 2025 with a sale price of $7.5 million. What will be their tax liability, assuming that they are in a 28% tax bracket?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
1. An hotel compnay is purchasing a lot for $350k and plans to built a 5-story $8.5 million hotel on it. The furinute for equippingthis hotel is estimated at $750,000. They plan to put the hotel in service on May 10th 2018. Develop a
2. The same hotel company will sell the hotel on June 15th 2025 with a sale price of $7.5 million. What will
be their tax liability, assuming that they are in a 28% tax bracket?
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