Question

Paragon Properties built a shopping center at a cost of $50M in year 2010. The company started leasing space in July of 2014. The land was purchased for $5M. Determine the depreciation charges through 2017 if the property was sold in November 2017.

Answer 1

Year = 2014  

Cost= $50 M - $5 M = $45 M

Rate =1.177%  

Depreciation= 1.177% * $45 M = $529,650

Year=2015

Cost = $45 M

Rate= 2.564%  

Depreciation= $45 M * 2.564% = $1,153,800

Year = 2016

Cost = $45 M

Rate =2.564%  

Depreciation= $45 M * 2.564% = $1,153,800

Year = 2017

Cost = $45 M

Rate =2.564%  

Depreciation= $45 M * 2.564% = $1,153,800

therefore, total depreciation= $1,153,800 + $1,153,800 + $1,153,800 + $529,650 = $3,991,050

Depreciation charges through 2017 = $3,991,050 .

Answer 2

The Depreciation charges through 2017, if property was sold in November 2017 will be $3,991,050.

Depreciation

In the following question we are provided with information as follows:

The Value of the Property in the year 2010 = $50M. The Company started leasing space in July of 2014.

Land was purchased for $5M, which means the Cost of property is now $50M - $5M = $45M. The Depreciation rate in 2014 is 1.17%,

Depreciation value in 2014 = $45M × 1.17 =Depreciation rate in 2016 = 2.5%, Depreciation value = $45M × 2.5% =  $529,650

Depreciation rate in 2015 = 2.5%, which give Depreciation value in 2015 = $45M × 2.5% =  $1,153,800.

Depreciation rate in 2016 = 2.5%, Depreciation value = $45M × 2.5% =  $1,153,800.

Depreciation rate in 2017 = 2.5%, Depreciation value = $45M × 2.5% =  $1,153,800.

Therefore, Total Depreciation value in 2017 =  $529,650 + $1,153,800 + $1,153,800 + $1,153,800  = $3,991,050

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