new conserved lensonders The grders wil have ?\" ntledcast of$79 500 and a cost
ID: 1172684 • Letter: N
Question
new conserved lensonders The grders wil have ?" ntledcast of$79 500 and a cost recovery penod of 5 years They wd be deprecaled using the MACRS scheMe?COD rate tax mates wegveno ?.ifD6trm purchases he grnders before yw.d what depreatorepene wil it be able tocam pis ,ew? b. If the lirm reduces its reported income by the amount of the depreciation expense calculated in part a what la savings will esr More lefo More Info Rounded Depreciation Percentages by Recovery Year Using MACRS for rst Four Property Classes on the icon locates on the top-right comer of the duta table below in order to copy its contents into a soreacshee Corporate Tax Rate Schedule Percentage by of taxable 50 000 7500 . (25% 3750 (34% 22250.09% 113 900. (34% amour, over x amount over xanor, over rt over 75,000 o 335 000 10.000 000 15.000 000, 8 333 333 100 000 335 000 10 000 000 15 000 000 8 333 333 135.000 t 10 000,000 to 3 000.06% 5150000 *(30% 641666, - (35% x amore ove xnurt over x anart ove 15 000,000 Over 18 333 333 he actua using the hatyear Pint DoneExplanation / Answer
(a) If the firm purchases the grinders before year-end, what depreciation expense will it be able to claim this year?
5 years MACRS Depreciation rate for first year =20%
Cost of the grinders =$79500
The depreciation expense they will be able to claim this year =$79500*20% =$15900
(b) tax savings will be
The pretax income wil decresed by $15900 (That income decresed from $430,000 to $414100 So ,
tax savings
Tax on $430,000 income =$113900+ 34% *($430,000-$335000) =$146200
Tax on $414,100 income =$113900+ 34% *($414,000-$335000) =$140,794
Tax savings =$146200-$140794 =$5406
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