 # Straight-line depreciation 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 years. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation. ### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094 ### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 10, Problem 10.1APE
Textbook Problem

## Straight-line depreciationA 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 years. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation.

Expert Solution

(a)

To determine

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the residual value is shown as below:

Depreciation cost = (Cost of the assetResidual value)Estimated useful life of the asset

To determine: the depreciable cost of the building.

### Explanation of Solution

Determinethe depreciable cost of the building.

Cost of the building= $1,450,000 Residual value of the building =$300,000.

DepreciableCost =Cost−</

Expert Solution

(b)

To determine
the straight-line rate.

Expert Solution

(c)

To determine
the annual straight-line depreciation.

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