A) Cullumber Company hired Kirk Construction to construct an office building for ₤7600000 on land costing...

A) Cullumber Company hired Kirk Construction to construct an office building for ₤7600000 on land costing ₤2300000, which Cullumber Company owned. The building was complete and ready to be used on January 1, 2022 and it has a useful life of 40 years. The price of the building included land improvements costing ₤610000 and equipment costing ₤750000. The useful lives of the land improvements and the equipment are 10 years and 5 years, respectively. Cullumber Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What total amount of depreciation expense would Cullumber Company report on its income statement for the year ended December 31, 2022?

B)Cullumber Company hired Kirk Construction to construct an office building for ₤7500000 on land costing ₤2700000, which Cullumber Company owned. The building was complete and ready to be used on January 1, 2022 and it has a useful life of 40 years. The price of the building included land improvements costing ₤690000 and equipment costing ₤840000. The useful lives of the land improvements and the equipment are 10 years and 5 years, respectively. Cullumber Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Cullumber Company's December 31, 2022 statement of financial position?

C)An asset was purchased for ¥390000. It had an estimated residual value of ¥42000 and an estimated useful life of 10 years. After 5 years of use, the estimated residual value is revised to ¥31500 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in year 6 would be

D) Cullumber Company purchased equipment on January 1, 2020 for €29500 with an estimated residual value of €7500 and estimated useful life of 8 years. On January 1, 2022, Cullumber decided the equipment will last 12 years from the date of purchase. The residual value is still estimated at €7500. Using the straight-line method the new annual depreciation will be:

Solutions

Expert Solution

	Land Improvements	Equipment	Building	Total
Cost (a)	610000	750000	6240000	7600000
Useful life (years) (b)	10	5	40
Annual depreciation (a)/(c)	61000	150000	156000	367000

Building cost = 7600000 - 610000 - 750000 = 6240000

Depreciation expense for year ended December 31, 2022: 367000

	Building
Cost* (a)	5970000
Useful life (years) (b)	40
Annual depreciation (c) = (a)/(b)	149250
Net amount reported (d) = (a) - (c)	5820750

*Cost = 7500000 - 690000 - 840000 = 5970000

Annual depreciation from year 1 to 5 = (390000 - 42000)/10 = 34800

Accumulated depreciation for 5 years = 34800 x 5 = 174000

Book value at beginning of year 6 = 390000 - 174000 = 216000

Revised depreciable value = 216000 - 31500 = 184500

Remaining usefil life = 10 - 5 = 5

Depreciation expense in year 6 = 184500/5 = 36900

Annual depreciation = (29500 - 7500)/8 = 2750

Accumulated depreciation for 2 years = 2750 x 2 = 5500

Book value at beginning of 2022 = 29500 - 5500 = 24000

Remaining useful life = 12 - 2 = 10

New annual depreciation = 24000/10 = 2400

ekkarill92 answered 1 year ago

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