Depreciation Questions BAF Question #1 On September 1, 2016, Company M purchased a building at $1,200,000. Buildings are depreciated using the straight-line depreciation method. Useful life of the building is 40 years. Salvage value of the building at the end of useful life is estimated as $120,000 What is the amount of depreciation expense for 2016? What is the book value of the building at December 31, 2016? Question 2 Nemesis Sports has the following equipment: Purchase date September 1, 2016 Cost $360,000 Salvage value $36,000 Amount to be depreciated $324,000 Years of useful life 5 (1) Nemesis Sports used the straight-line depreciation method, what is the amount of depreciation for each year? # of months for depreciation Depreciation Accumulated expense depreciation (1) Straight-line depreciation method Years Cost Salvage of Annual value useful depreciation life 2016 $360,000 $36,000 5 $64,800 2017 $360,000 $36,000 5 $64,800 2018 $360,000 $36,000 5 $64.800 2019 $360,000 $36,000 5 $64.800 2020 $360,000 $36.000 5 $64.800 2021 $360,000 $36,000 5 $64.800 4 $21,600 12 12 12 12 8 $21.600 (*2) $64.800 $64.800 $64,800 $64.800