Question

Holly, Inc. has a building that originally cost $460,000. Holly expects to be able to sell the facility for $306,000 at the end of its useful life. The balance of the related Accumulated Depreciation account is $113,000. The depreciable cost of the facility is___________.

Answer 1

The depreciable cost of Holly, Inc.'s facility is calculated by subtracting the salvage value from the original cost, which amounts to $154,000. The balance of Accumulated Depreciation does not affect this calculation.

Step-by-step explanation:

The depreciable cost of a facility is calculated by subtracting the estimated salvage value at the end of its useful life from the original cost of the asset. In the scenario provided, Holly, Inc. has a building that originally cost $460,000. It's expected that this building will be able to be sold for $306,000 at the end of its useful life. The depreciable cost is the difference between the original cost and the salvage value, which is $460,000 - $306,000 = $154,000. The Accumulated Depreciation account's balance of $113,000 is a record of the depreciation that has been charged against the asset over time, but it does not affect the calculation of the building's depreciable cost.