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A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the  assumption it would have a 25-year life and a $20,000 salvage value.     At the beginning of the building's 11th year it was recognized the building had 10 years of  remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000.     1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life?   Cost Less: Salvage value Depreciable cost   Annual depreciation -------------------------------->     2. What is the accumulated depreciation at the end of Year 10?   Accumulated depreciation ------------------------>     3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value?   Cost Less: Accumulated depreciation Book value Less: Revised salvage value Depreciable cost   Annual depreciation -------------------------------->

A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the  assumption it would have a 25-year life and a $20,000 salvage value.     At the beginning of the building's 11th year it was recognized the building had 10 years of  remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000.     1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life?   Cost Less: Salvage value Depreciable cost   Annual depreciation -------------------------------->     2. What is the accumulated depreciation at the end of Year 10?   Accumulated depreciation ------------------------>     3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value?   Cost Less: Accumulated depreciation Book value Less: Revised salvage value Depreciable cost   Annual depreciation -------------------------------->

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A building was purchased for $400,000 and depreciated for 10 years on a straight-line basis under the 
assumption it would have a 25-year life and a $20,000 salvage value.  
 
At the beginning of the building's 11th year it was recognized the building had 10 years of 
remaining life instead of 15 and that at the end of the remaining 10 years its salvage value would be $15,000.
 
 
1. What is the annual amount of depreciation for the first 10 years based on the original 25-year life?
 
Cost
Less: Salvage value
Depreciable cost
 
Annual depreciation -------------------------------->
 
 
2. What is the accumulated depreciation at the end of Year 10?
 
Accumulated depreciation ------------------------>
 
 
3. What is the annual depreciation for the remaining 10 years based on the revision in life and salvage value?
 
Cost
Less: Accumulated depreciation
Book value
Less: Revised salvage value
Depreciable cost
 
Annual depreciation -------------------------------->
 
 
 
 
 
 
 
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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