Francisco Corporation is constructing a new building at a total initial cost of $10,000,000. The building is
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Francisco Corporation is constructing a new building at a total initial cost of $10,000,000. The building is expected to have a useful life of 50 years with no residual value. The building’s finished surfaces (e.g., roof cover and floor cover) are 5% of this cost and have a useful life of 20 years.
Building services systems (e.g., electric, heating, and plumbing) are 20% of the cost and have a useful life of 25 years. The depreciation in the first year using component depreciation, assuming straight-line depreciation with no residual value, is:
(a) $200,000.
(c) $255,000.
(b) $215,000.
(d) None of the above.
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