Perkins Construction Company bought a building for $1,200,000 25 years ago; it is to be used as a warehouse. A number of major structural repairs, completed at the beginning of the current year at a cost of $125,000, are expected to extend the life of the building 10 years beyond the original estimate. The building has been depreciated by the straight-line method. Salvage value is expected to be negligible and has been ignored. The book value of the building before the structural repairs is $400,000.
(a) What has the amount of annual depreciation been in past years?
(b) What is the book value of the building after the repairs have been recorded?
(c) What is the amount of depreciation for the current year, using the straight-line method?