A company owns some land and buildings for which the following details are relevant : Cost of land Taka 50,000; cost of building Taka 100,000, estimated life of building 20 years, estimated residual value of building Taka 2000; estimated residual value of land Taka 50,000. The company uses the straight line depreciation method. Which is the correct annual depreciation charge for this asset?
Created: 6 years ago |
Updated: 1 month ago
best des
Annual Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life
For the building:
- Cost of Building = Taka 100,000
- Residual Value of Building = Taka 2,000
- Useful Life of Building = 20 years
So, plugging these values into the formula:
Annual Depreciation Expense = (100,000 - 2,000) / 20 = 98,000 / 20 = 4,900
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