E.4.6 A wood products company has decided to purchase new logging equipment for
ID: 1228108 • Letter: E
Question
E.4.6
A wood products company has decided to purchase new logging equipment for $100,000 with a trade-in
of its old equipment. The old equipment has a BV of $10,000 at the time of the trade-in. The new equipment
will be kept for 10 years before being sold. Its estimated SV at the time is expected to be $5,000.
The recovery period of the asset, (using the GDS guidelines in Table 7-2), is: (Please show work)(Please use excel if possible)
10 years
7 years
5 years
3 years
a.10 years
b.7 years
c.5 years
d.3 years
Explanation / Answer
The recovery period of the asset under the GDS guidelines would be 7 years.
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