# Depreciation Calculation for Macro Company ## Asset Information - **Asset:** Office building - **Purchase Date:** January 1, 2014 - **Original Cost:** $5,800,000 - **Useful Life:** 20 years - **Salvage Value:** $ - **Depreciation Method:** Straight-line ## A. Annual Depreciation Expense (2014–2019) ### Formula \[ \text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}} \] ### Calculation \[ \text{Annual Depreciation} = \frac{5,800,000 - }{20} = \$290,000 \] **Years:** 2014, 2015, 2016, 2017, 2018, 2019 **Annual Depreciation Expense:** **$290,000 per year** --- ## B. Depreciation Expense for 202 (Including Addition) ### Step 1: Depreciation for Building (Jan 1 – Dec 31, 202) - **Depreciation for Jan 1 – June 30, 202:** \[ \$290,000 \times \frac{6}{12} = \$145,000 \] ### Step 2: Addition of Wall Partitions (July 1, 202) - **Cost of Addition:** $150,000 - **Useful Life:** Same as building (remaining life = 20 - 6.5 = 13.5 years, but typically, it matches the remaining life of the building) #### Building - **Remaining life as of July 1, 202:** 13.5 years #### Depreciation for Addition (July 1 – Dec 31, 202): \[ \text{Annual Depreciation for Addition} = \frac{150,000}{13.5} = \$11,111.11 \] - For half-year (July 1 – Dec 31): \[ \$11,111.11 \times \frac{6}{12} = \$5,555.56 \] ### Step 3: Total Annual Depreciation for 202 - **Building (full year):** $290,000 - **Addition (half year):** $5,555.56 \[ \text{Total 202 Depreciation} = \$290,000 + \$5,555.56 = \$295,555.56 \] --- ## Summary Table | Year | Building Depreciation | Addition Depreciation | Total Depreciation | |-----------|----------------------|----------------------|--------------------| | 2014–2019 | $290,000 | $ | $290,000 | | 202 | $290,000 | $5,555.56 | $295,555.56 | --- ## Notes - The addition is depreciated over the remaining useful life of the building (13.5 years as of July 1, 202). - For the year 202, the addition is depreciated for only half a year. - Salvage value is assumed to be zero for both the building and the addition. --- **Image Example:** *(No image provided, but if one were used, a depreciation timeline chart would be appropriate.)*