A Building Was Purchased for $370,000 and Depreciated for Ten

question 61

Essay

A building was purchased for $370,000 and depreciated for ten years on a straight-line basis under the assumption it would have a twenty-year life and a $10,000 salvage value. At the beginning of the building's eleventh year it was recognized the building had eight years of remaining life instead of ten and that at the end of the remaining eight years its salvage value would be $16,000. What amount of depreciation should be recorded in each of the building's remaining eight years?

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Definitions:

Moral Obligation

A duty which one owes, and which one ought to perform, but which he is not legally bound to fulfill.

Rawlsian Justice

A theory of distributional justice that concludes that the social contract emerging from the “original position” would call for an income distribution that would maximize the well-being of the worst-off member of society.

Risk Averse

A preference for avoiding loss over making a gain.

Marginal Utility

The extra pleasure or benefit gained from using one more unit of a product or service.