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 .