The Strata Plan BCS 3456 strata council in Surrey is reviewing its 3-year depreciation report, which recommends replacing the building's roof in 5 years at an estimated cost of $250,000. The current contingency reserve fund (CRF) balance is $180,000. To adequately fund this project, what minimum annual contribution to the CRF should the strata council recommend over the next 5 years, assuming no other significant capital expenses during that period?

Question: The Strata Plan BCS 3456 strata council in Surrey is reviewing its 3-year depreciation report, which recommends replacing the building's roof in 5 years at an estimated cost of $250,000. The current contingency reserve fund (CRF) balance is $180,000. To adequately fund this project, what minimum annual contribution to the CRF should the strata council recommend over the next 5 years, assuming no other significant capital expenses during that period?

Answer options: ✅ An annual contribution of $14,000.

• An annual contribution of $12,000.
• An annual contribution of $18,000.
• An annual contribution of $20,000.

Correct answer: An annual contribution of $14,000.

Explanation: To fund the $250,000 roof replacement with an existing CRF of $180,000, an additional $70,000 is needed over 5 years ($250,000 - $180,000 = $70,000), which requires an annual contribution of $14,000 ($70,000 / 5 years).