Magpie Ltd Purchased a Building on a Prime Central Business

question 38

Multiple Choice

Magpie Ltd purchased a building on a prime central business district site for $800,000.The value of the land is considered to be $350,000.The useful life of the building is expected to be 25 years after Magpie Ltd spends a further $80,000 on improvements.The residual value of the building at that time is estimated to be $60,000.The benefits from owning the land and building are expected to be derived evenly.What is the appropriate annual depreciation charge?

• A) $18,800
• B) $32,800
• C) $15,600
• D) $14,000
• E) None of the given answers.

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Definitions:

Months

Units of time measurement that constitute roughly one-twelfth of a year, used in planning and tracking various financial activities.

Interest

The cost of borrowing money or the payment received for lending money, usually expressed as a percentage of the principal.

Investment

Investment involves allocating resources, usually money, with the expectation of earning an income or profit over time.

Days

Units of time measurement equating to approximately 24 hours, representing the approximate period of the Earth's rotation on its axis.