A building currently has a net book value of $650,000 after three years of straight-line amortization totalling $150,000.The estimated residual value is $50,000.What was the building's original cost?
A)$900,000
B)$850,000
C)$800,000
D)$750,000

Question

Quizplus · Accepted Answer

The net book value of an asset is its original cost minus accumulated depreciation. We know that after 3 years of straight-line amortization totaling $150,000, the net book value is $650,000. So, the accumulated depreciation after 3 years is $150,000, and the original cost minus $150,000 is $650,000. Therefore, the original cost of the building is $800,000 ($650,000 + $150,000 + $50,000). Thus, the correct choice is C.

A Building Currently Has a Net Book Value of $650,000