A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated residual value of $300,000

A building acquired at the beginning of the year at a cost of $1,450,000 has an estimated residual value of $300,000 and an estimated useful life of 10 year. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation.

Answer:

a. $1,150,000  ($1,450,000 – $300,000)

b. 10%  (100% ÷ 10)

c. $115,000  ($1,150,000 × 10%) or ($1,150,000 ÷ 10 years)