ACCA FA · Chapter 6 · Question 8 of 12
A building originally cost $600,000 and had a useful life of 50 years. After 20 years it was revalued to $720,000, with its remaining useful life unchanged. What is the annual depreciation charge after the revaluation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $24,000
Explanation
After revaluation the asset is depreciated over its remaining useful life: 50 - 20 = 30 years. Annual depreciation = $720,000 / 30 = $24,000. Using the full original life gives $14,400, continuing on cost gives $12,000, and dividing by the 20 years already used gives $36,000.
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