A building acquired at the beginning of the year at a cost of $1,375,000 has an estimated residual value of $250,000

A building acquired at the beginning of the year at a cost of $1,375,000 has an estimated residual value of $250,000 and an estimated useful life of 40 years. Determine (a) the double-declining-balance rate and (b) the double-declining-balance depreciation for the first year.

Answer:

a. 5%  [(100% ÷ 40) × 2]

b. $68,750  ($1,375,000 × 5%)

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)