Question

Able purchased an income property for $200,000. He obtained a loan for $190,000. The land was valued at $40,000 and the salvage value of the building was $10,000. As a basis for depreciation, the amount Able could use for depreciation is:

Answer 1

The amount Able could use for depreciation is $150,000.

Step-by-step explanation:

The amount Able could use for depreciation is the cost of the building, excluding the value of the land and any salvage value.

In this case, the cost of the building is the purchase price of $200,000, minus the value of the land ($40,000) and the salvage value ($10,000). So, the amount Able could use for depreciation is $150,000.