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20 August, 09:51

An investment property now worth $180,000 was purchased seven years ago for $142,000. At the time of the purchase, the land was valued at $18,000. Using a 39-year life for straight-line depreciation purposes, the present book value of the property isa. $95,071.35. b. $113,071.00. c. $126,000.50. d. $119,743.59.

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  1. 20 August, 10:06
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    d. $119,743.59

    Step-by-step explanation:

    actual value (AV) = $180,000

    purchase price (PP) = $142,000

    intial value (IV) = $18,000

    useful live (UL) = 39 years

    First, we subtract the value of the property from the purchase value or IV to know the value to be depreciated:

    PP-IV = $142,000-$18,000 = $124,000

    Then we find out the yearly depreciation by dividing $124,000 into useful live (UL) years:

    $124,000/39 = $3,179.49 This is the amount that the property depreciates every year.

    But after 7 years the depreciation is: $3,179.49*7 = $22,256.41

    We subtract the depreciation in the 7 years from the purchase price (PP) and that's the present book value of the property:

    $142,000-$22,256.41=$119,743.6
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