The Perkins Construction Company bought a building for $800,000 to be used as a warehouse. A number of major structural repairs completed at the beginning of the current year at a cost of $125,000 are expected to extend the life of the building Id years beyond the original estimate. For book purposes, the building has been depreciated by the straight-line method for 25 years. The salvage value
Is expected to be negligible and has been ignored. The book value of the building before the structural repairs is $400,000.
(a) What has the amount of annual depreciation been in past years?
(b) What is the book value of the building after the repairs have been recorded?
(c) What is the amount of depreciation for the cur-rent year, according to the straight-line method? (Assume that the repairs were completed at the very beginning of the year.)
(d) For tax purposes. what is the amount of depreciation for the current year. assuming that the building belongs to a 39-year real property class?