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The question in the image asks for the initial purchase price of a building using straight-line depreciation.

We are given the following information:
- **Useful life**: 20 years
- **Residual value**: $30,000
- **Annual depreciation cost**: $25,000
- **Depreciation method**: Straight-line

The straight-line depreciation formula is:

\[
\text{Annual Depreciation} = \frac{\text{Initial Purchase Price} - \text{Residual Value}}{\text{Useful Life}}
\]

We need to solve for the **Initial Purchase Price** (P).

From the formula:
\[
25,000 = \frac{P - 30,000}{20}
\]

Now, I'll solve for $ P $.The initial purchase price of the building is **$530,000**.

Would you like any additional details or have any questions? Here are five related questions you might find helpful:

1. How does straight-line depreciation compare to other depreciation methods?
2. What impact does residual value have on the depreciation cost?
3. How would a shorter useful life affect the annual depreciation expense?
4. How is the residual value determined in asset depreciation?
5. Can depreciation methods differ based on asset type?

**Tip**: Straight-line depreciation is simple but may not accurately reflect the actual wear and tear on some assets, making other methods like declining balance more appropriate in some cases.

Blues Inc. uses the straight-line depreciation method to account for its amortization and depreciation of assets. A building with a 20-year predicted useful life and a 30,000 residual value was bought in 2021. The building’s depreciation cost to the business in 2021 was $25,000. As the company’s financial analyst, determine the building’s initial purchase price.

Learn how to calculate the initial purchase price of a building using straight-line depreciation. This problem involves determining the building's value based on its 20-year useful life, $30,000 residual value, and $25,000 annual depreciation. Suitable for students and professionals working with depreciation and asset management.

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