Your company has purchased a large new trucktractor for over-the-road use (asset

Question

Your company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $185000. With additional options costing $13000, the cost basis for depreciation purposes is $198000. Its MV at the end of four years is estimated as $42000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year two? b. What is the MACRS depreciation in the third year? c. What is the BV at the end of year two?. a. The cumulative depreciation through the end of year two is $ nothing.

Explanation / Answer

Data’s Given ;

Asset Basis                    $ 1,98,000

Recovery Period            5 Year

Convention                    Half Year Convention (Assumed )

Method Used                 200% Declining Balance Method

Truck Tractor Depreciation Schedule

Year

Basis

%

Depreciation

Expenses

Cumilative Depreciation

Book Value

Method Used

1

$ 1,98,000

20.00

$ 39600

$ 39600

$158400

Declining Balane

2

$ 1,98,000

32.00

$ 63360

$ 102960

$ 95040

Declining Balane

3

$ 1,98,000

19.20

$ 38016

$ 140976

$ 57024

Declining Balane

4

$ 1,98,000

11.52

$ 22810

$ 163786

$ 34214

Declining Balane

5

$ 1,98,000

11.52

$ 22810

$ 186595

$ 11405

Declining Balane

Answers to the questions

Truck Tractor Depreciation Schedule

Year

Basis

%

Depreciation

Expenses

Cumilative Depreciation

Book Value

Method Used

1

$ 1,98,000

20.00

$ 39600

$ 39600

$158400

Declining Balane

2

$ 1,98,000

32.00

$ 63360

$ 102960

$ 95040

Declining Balane

3

$ 1,98,000

19.20

$ 38016

$ 140976

$ 57024

Declining Balane

4

$ 1,98,000

11.52

$ 22810

$ 163786

$ 34214

Declining Balane

5

$ 1,98,000

11.52

$ 22810

$ 186595

$ 11405

Declining Balane

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