please answer 8, 9 and 10 with explanations!! Questions 8 through 10 are based o

Question

please answer 8, 9 and 10 with explanations!! Questions 8 through 10 are based on the following: A company purchased an aset 2 recovery period. The depreciation charge by the MACRS methoaye met year 2is $24,320 24320 8 that has a S-year 2 years 8 (5 pts) What was the first cost of the asset? B. $76,000 C. $100,000 D. $121,600 9. (4 pts) What was the depreciation charge for year 1? A $0 C. $15,200 D. $24,320 10. (4 pts) What is the book value of the asset at the end of year 2 A. $36,480 800 C. $72,960 D. $76,000

Explanation / Answer

Reference to MACRS Depreciation tables indicates 32% depreciation on for year - 2. These rates are directly calculated on first cost, because 200% double declining balances are logically adjusted to give these rates - as a percentage of first cost.

a) Given that depreciation charged for year - 2 = 24320. If we take first cost = X

X * 32% = 24320 and .........we have X = First cost = 24320 / 0.32 = 76000 ............final answer

b) Depreciation charges for the year - 1 = 76000 * 20% = 15200 ........final answer

This 20% rate of depreciation is also derived from MACRS 5 years tables.

c) Book value of the asset at the end of year - 2

For this the first cost of 76000 shall be reduced by 15200 ( year - 1 depreciation) and 24320 ( year - 2 depreciation)

= 76000 - 15200 - 24320 = 36480.....................final answer

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