Question 72

$76,800

To determine the depreciated value of the building, we first calculate its total volume and then the replacement cost. The volume of the building is 20' x 40' x 15' = 12,000 cubic feet. The replacement cost is 12,000 cubic feet x $8/cubic foot = $96,000. After applying the 20% depreciation, the value becomes $96,000 - ($96,000 x 0.20) = $76,800.

A) $76,800

This option is correct as it accurately reflects the depreciated value calculated from the original replacement cost after applying the total depreciation of 20%. The step-by-step breakdown confirms that this is the correct outcome.

B) $81,920

This option is incorrect because it does not account for the full 20% depreciation from the replacement cost. If the value were calculated to reflect only a partial depreciation, it would yield a figure higher than the actual depreciated value.

C) $85,333

This option is also incorrect as it suggests a different amount that does not align with the calculations of depreciation based on the provided figures. It implies a miscalculation of the depreciation percentage or the initial replacement cost.

D) $96,000

This option represents the original replacement cost before any depreciation is applied. Therefore, it is incorrect as it does not reflect the necessary adjustment for the building's age and depreciation.

Conclusion

The correct answer, $76,800, demonstrates the accurate application of depreciation to the original replacement cost of the building. All other options fail to represent the correct depreciated value either by not applying the full depreciation or incorrectly calculating the value based on the given data.