Scenario : Demolition Costs & Land Improvements
A company demolishes an old building on a property purchased for $land: $ building: $
Demolition costs: $
New landscaping and fencing are added to the property for $
A new building will be constructed on the property in the future.
Analyze:
How are the demolition costs of the old building treated for tax purposes?
Are the landscaping and fencing costs depreciable? If so over what timeframe?
How does the allocation of the purchase price between land and building impact future cost recovery?
Scenario : Switching Depreciation Methods
Equipment purchased for $ with an estimated year useful life.
Initial depreciation method: Declining Balance
After years, the company wants to switch to StraightLine depreciation for the remainder of the asset's life.
Calculate:
Accumulated depreciation at the time of the switch.
Depreciation deduction with the straightline method going forward.
Requirementsjustifications for switching depreciation methods?
