In 1990, Sheridan Company completed the construction of a building at a cost of $860,000 and first occupied it in January 1991. It was estimated that the building would have a useful life of 40 years and a salvage value of $26,000 at the end of that time. Early in 2001, an addition to the building was constructed at a cost of $215,000. 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 $9,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years beyond the original estimate.

In 1990, Sheridan Company completed the construction of a building at a cost of $860,000 and first occupied it in January 1991. It was estimated that the building would have a useful life of 40 years and a salvage value of $26,000 at the end of that time. Early in 2001, an addition to the building was constructed at a cost of $215,000. 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 $9,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years beyond the original estimate.

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Description: Compute the annual depreciation that would have been charged from 2001 through 2018.Annual depreciation from 2001 through 2018$/ yr In 1990, Sheridan Company completed the construction of a building at a cost of $860,000 and first occupied it in Jan

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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Compute the annual depreciation that would have been charged from 2001 through 2018.
Annual depreciation from 2001 through 2018
$
/ yr

In 1990, Sheridan Company completed the construction of a building at a cost of $860,000 and first occupied it in January 1991. It
was estimated that the building would have a useful life of 40 years and a salvage value of $26,000 at the end of that time. Early in
2001, an addition to the building was constructed at a cost of $215,000. 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 $9,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years
beyond the original estimate.

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