Question

A building acquired at the beginning of the year at a cost of $115,400 has an estimated residual value of $4,400 and an estimated useful life of 10 years. Determine the following:

Line Item Description Amount
(a) The depreciable cost $fill in the blank 1

(b) The straight-line rate fill in the blank 2
%
(c) The annual straight-line depreciation

Answer 1

To determine the requested values, we can follow these steps:

### (a) The depreciable cost:
The depreciable cost is calculated as follows:

\[
\text{Depreciable Cost} = \text{Cost of Asset} - \text{Residual Value}
\]

Substituting the values provided:

\[
\text{Depreciable Cost} = \$115,400 - \$4,400 = \$111,000
\]

**Fill in the Blank 1:** $111,000

### (b) The straight-line rate:
The straight-line rate is calculated by dividing 100% by the estimated useful life in years.

\[
\text{Straight-Line Rate} = \frac{100\%}{\text{Useful Life}}
\]

Substituting the values provided:

\[
\text{Straight-Line Rate} = \frac{100\%}{10} = 10\%
\]

**Fill in the Blank 2:** 10 %

### (c) The annual straight-line depreciation:
The annual straight-line depreciation is calculated using the depreciable cost and the straight-line rate.

\[
\text{Annual Depreciation} = \text{Depreciable Cost} \times \text{Straight-Line Rate}
\]

Substituting the values provided:

\[
\text{Annual Depreciation} = \$111,000 \times 0.10 = \$11,100
\]

### Summary:
- (a) The depreciable cost: **$111,000**
- (b) The straight-line rate: **10 %**
- (c) The annual straight-line depreciation: **$11,100**