At December 31, 2021, the following data were available for a building owned by Omega Company:
$$\begin{array} { | l | r | }
\hline \text { Building cost } & \$ 700,000 \
\hline \text { Accumulated depreciation - building } & 525,000 \
\hline \text { Estimated residual value at end of the useful life } & 25,000 \
\hline \text { Estimated remaining useful life } & 15 \
\hline
\end{array}$$ A small room was built on the back of the building at a cost of $45,000. The room was completed on June 30, 2022 and was used as office space commencing July 2, 2022. The company uses straight-line depreciation, and accounts for partial years using the number of months the asset is available for use.
Required:
How much is the impact of this expenditure on income before taxes for 2022?

Question

At December 31, 2021, the following data were available for a building owned by Omega Company:
 $$\begin{array} { | l | r | } 
\hline \text { Building cost } & \$ 700,000 \
\hline \text { Accumulated depreciation - building } & 525,000 \
\hline \text { Estimated residual value at end of the useful life } & 25,000 \
\hline \text { Estimated remaining useful life } & 15 \
\hline
\end{array}$$ A small room was built on the back of the building at a cost of $45,000. The room was completed on June 30, 2022 and was used as office space commencing July 2, 2022. The company uses straight-line depreciation, and accounts for partial years using the number of months the asset is available for use.
Required:
How much is the impact of this expenditure on income before taxes for 2022?

Quizplus · Accepted Answer

The Answer of At December 31, 2021, the following data were available for a building owned by Omega Company:
 $$\begin{array} { | l | r | } 
\hline \text { Building cost } & \$ 700,000 \
\hline \text { Accumulated depreciation - building } & 525,000 \
\hline \text { Estimated residual value at end of the useful life } & 25,000 \
\hline \text { Estimated remaining useful life } & 15 \
\hline
\end{array}$$ A small room was built on the back of the building at a cost of $45,000. The room was completed on June 30, 2022 and was used as office space commencing July 2, 2022. The company uses straight-line depreciation, and accounts for partial years using the number of months the asset is available for use.
Required:
How much is the impact of this expenditure on income before taxes for 2022?

At December 31, 2021, the Following Data Were Available for a Building