Tristen Company purchased a five-story office building on January 1, 2016, at a

Question

Tristen Company purchased a five-story office building on January 1, 2016, at a cost of $8,800,000. The building has a residual value of $277,000 and a 30-year life. The straight-line depreciation method is used. On June 30, 2018, construction of a sixth floor was completed at a cost of $2,420,000. Required: Calculate the depreciation on the building and building addition for 2018 and 2019 assuming that the addition did not change the life or residual value of the building. Depreciation Building Addition Year 2018 2019

Explanation / Answer

Before addition , depreciation = ($8800000 - $277000) / 30 years

= $284100

Depreciation for 6 months = $284100 * 6 /12

= $142050

Accummulated depreciation = ($284100 * 2 ) + $142050

= $710250

Book value = $8800000 - $710250

= $8089750.

Next 6 months

Depreciation = [($8089750 + $2420000) - $277000] / 27.5 years

= $372100

Depreciation = $372100 * 6 /12

= $186050

Year Building Addition

2018 $142050

2019 $186050 $372100.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.