The selling price of a fourplex was 240,000. The building is five years old and has an estimated useful life of 60 years. What is the property's total depreciation to date?

• A. 10,000
• B. 20,000
• C. 30,000
• D. 40,000

Answer: (B)

Depreciation uses the cost basis of the property and is spread evenly over its estimated useful life using a straight‑line method. Here, the cost basis is 240,000 and the useful life is 60 years, so the annual depreciation is 240,000 divided by 60, which equals 4,000 per year. Five years have passed, so the total depreciation to date is 4,000 × 5 = 20,000. Note that in practice you would separate land value (not depreciable) from the building value, but with the information given, the depreciation math uses the full 240,000. Therefore, the total depreciation to date is 20,000.