On January 1, Comicon Corp. purchased land with a usable building on it for $300,000. At the time of purchase, the fair market values of the land and building were $100,000 and $150,000, respectively. Comicon depreciates the building using the straight-line method over 20 years with an expected $24,000 residual value. The annual depreciation expense on the building is:
A) $0.
B) $5,000.
C) $7,800.
D) $10,800.

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost - Residual value) / Useful life= (150,000 - 24,000) / 20= $7,800