In 1998, Novak Company completed the construction of a building at a cost of $2,500,000 and first occupied it in January 1999. It was estimated that the building will have a useful life of 40 years and a salvage value of $76,000 at the end of that time. Early in 2009, an addition to the building was constructed at a cost of $625,000. 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 $25,000. In 2027, it is determined that the probable life of the building and addition will extend to the end of 2058, or 20 years beyond the original estimate.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Compute the annual depreciation that would have been charged from 2009 through 2026.
Annual depreciation from 2009 through 2026 $
/yr.
Transcribed Image Text:Compute the annual depreciation that would have been charged from 2009 through 2026. Annual depreciation from 2009 through 2026 $ /yr.
In 1998, Novak Company completed the construction of a building at a cost of $2,500,000 and first occupied it in January 1999. It was
estimated that the building will have a useful life of 40 years and a salvage value of $76,000 at the end of that time.
Early in 2009, an addition to the building was constructed at a cost of $625,000. 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 $25,000.
In 2027, it is determined that the probable life of the building and addition will extend to the end of 2058, or 20 years beyond the
original estimate.
Transcribed Image Text:In 1998, Novak Company completed the construction of a building at a cost of $2,500,000 and first occupied it in January 1999. It was estimated that the building will have a useful life of 40 years and a salvage value of $76,000 at the end of that time. Early in 2009, an addition to the building was constructed at a cost of $625,000. 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 $25,000. In 2027, it is determined that the probable life of the building and addition will extend to the end of 2058, or 20 years beyond the original estimate.
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