If a building cost $600,000, has an estimated residual value of $240,000, has an estimated life of 36 years, and is depreciated by the straight-line method: a) What is the annual depreciation? b) what is the book value at the end of the 20th year?

Thanks for calculating it

To calculate the annual depreciation of a building using the straight-line method, you need to subtract the estimated residual value from the initial cost, and then divide that by the estimated life of the building.

a) The annual depreciation can be calculated as follows:

Initial cost - Estimated residual value = $600,000 - $240,000 = $360,000

Annual depreciation = ($600,000 - $240,000) / 36 years = $10,000 per year

So, the annual depreciation of the building is $10,000.

b) To find the book value at the end of the 20th year, we need to subtract the accumulated depreciation from the initial cost.

Accumulated depreciation = Annual depreciation * Number of years = $10,000 * 20 years = $200,000

Book value = Initial cost - Accumulated depreciation = $600,000 - $200,000 = $400,000

Therefore, the book value at the end of the 20th year is $400,000.