The purchase price of Property and Building was of 50 million(100 single rooms and...

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Accounting

The purchase price of Property and Building was of 50 million(100 single rooms and restaurants with a total of 200 seats)purchased 10 years ago. Each year, 250,000 have been recorded asdepreciation cost.
• The present value of Capital Stock is 14 millions, RetainedEarnings 3.5 millions, Mortgage 30 millions, Other long term loan 3millions, Working Capital 3 millions.
• We plan a refurbishment plan over the next 3 years of 2million a year; the planned works are quite expensive as we changethe entire furniture of the bedrooms and bathrooms. Based on this,we plan to depreciate this over 20 years using the straight linemethod.
• We are planning as well to build a second restaurant withterrace; investment cost has been budgeted to 2 millions, to bedepreciated over 10 years using the straight line method.
Based on the information above, what is the depreciationcost of refurbishment?

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4.0 Ratings (478 Votes)

Hi Pls see below tables Refurnishing of Rooms Bedrooms and Bathrooms Calculation Year 1 Year 2 Year 3 in Millions in Millions in Millions Opening value A 190 371 Refurbishment plan amount B 200 200 200 See Answer

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In: AccountingThe purchase price of Property and Building was of 50 million(100 single rooms and restaurants...The purchase price of Property and Building was of 50 million(100 single rooms and restaurants with a total of 200 seats)purchased 10 years ago. Each year, 250,000 have been recorded asdepreciation cost.• The present value of Capital Stock is 14 millions, RetainedEarnings 3.5 millions, Mortgage 30 millions, Other long term loan 3millions, Working Capital 3 millions.• We plan a refurbishment plan over the next 3 years of 2million a year; the planned works are quite expensive as we changethe entire furniture of the bedrooms and bathrooms. Based on this,we plan to depreciate this over 20 years using the straight linemethod.• We are planning as well to build a second restaurant withterrace; investment cost has been budgeted to 2 millions, to bedepreciated over 10 years using the straight line method.Based on the information above, what is the depreciationcost of refurbishment?