Depreciation : Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life. The following is the formula to calculate the depreciation. Depreciation cost = Cost of the asset-Salvage value Estimated useful life of the asset Straight-line method: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. Depreciation expense = (Cost of the asset-Salvage value) Estimated useful life of the asset To Determine: The depreciation on the building for the year 2018.

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Chapter 11, Problem 11.10BE

To determine

Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life. The following is the formula to calculate the depreciation.

Depreciation cost = Cost of the asset-Salvage valueEstimated useful life of the asset

Straight-line method:

Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Depreciation expense = (Cost of the asset-Salvage value)Estimated useful life of the asset

To Determine: The depreciation on the building for the year 2018.

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