Tristen Company purchased a five-story office building on January 1, 2022, at a cost of $5,000,000. The
Question:
Tristen Company purchased a five-story office building on January 1, 2022, at a cost of $5,000,000. The building has a residual value of $200,000 and a 30-year life. The straight-line depreciation method is used. On June 30, 2024, construction of a sixth floor was completed at a cost of $1,650,000.
Required:
Calculate the depreciation on the building and building addition for 2024 and 2025, assuming that the addition did not change the life or residual value of the building.
Step by Step Answer:
Building depreciation 5000000 200000 30 years ...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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