Jasper Ltd purchased a building at a total cost of $ 9,000,000 (which includes land at a cost of $1,000,000 in the purchase price). Jasper moved into the building on January 1, 1996. The estimated useful life of the building was 50 years with a residual value of $1,500,000. Jasper uses the straight-line method of depreciation.

In January 2006 an addition to the building was completed at a cost of $2,500,000. The addition did not change the previously estimated useful life of the original building. The addition to the building, as a separate component, has a residual value of $900,000. The addition does not have any economic use to the company beyond the life of the original building

In early 2020, the company revised its original estimate of the life of the building from 50 years to 40 years with no residual value for the original building or the addition.

REQUIRED:

a)What was the annual amount of depreciation charged from 1996 through 2005?(1.5 Marks)

b)What was the annual amount of depreciation from 2006 through 2019?(2.5 Marks)

c)Calculate the annual depreciation to be charged beginning with 2020.(6 Marks)

Answer rating: 100% (QA)

a To calculate the annual amount of depreciation charged from 1996 through 2005 we first need to find the depreciable cost of the building Since the c... View the full answer