4. USP S has purchased assets whose value is $23 million. The assets have a usef
ID: 2593915 • Letter: 4
Question
4. USP S has purchased assets whose value is $23 million. The assets have a useful life of 5 years and an estimated salvage value of $7 million. Prepare tables separately showing the depreciation expense, accumulated depreciation and the book value for both MACRS and SOYD depreciation methods. Calculation process (show your working) required to receive credit. a) 5-Year MACRS Method. [10 points] Year BV Rate 00.00% 20.00% 32.00% 19.20% 11.52% 11.52% 05.76% Dt 5 b) SOYD Method. (Calculation Process required) [10 points] Year De BVExplanation / Answer
1.
5 Years MARCS Method
(In Millions)
Year
Depreciable
Value
Rate
Depreciation
Accumulated
Depreciation
Book Value
0
23
0%
1
23
20%
4.6
4.6
18.4
2
23
32%
7.36
11.96
11.04
3
23
19.20%
4.416
16.376
6.624
4
23
11.52%
2.6496
19.0256
3.9744
5
23
11.52%
2.6496
21.6752
1.3248
6
23
5.76%
1.3248
23
0
Total
15
16
2.
Sum of Years Digit method
(In Millions)
Year
Depreciable
Value
Digits
Depreciation
Accumulated
Depreciation
Book Value
0
16
1
16
5
5.33
(5/15*16)
5.33
17.67
2
16
4
4.27
(4/15*16)
9.6
13.4
3
16
3
3.2
(3/15*16)
12.8
10.2
4
16
2
2.13
(2/15*16)
14.93
8.07
5
16
1
1.07
(1/15*16)
16
7
Total
15
16
Year
Depreciable
Value
Rate
Depreciation
Accumulated
Depreciation
Book Value
0
23
0%
1
23
20%
4.6
4.6
18.4
2
23
32%
7.36
11.96
11.04
3
23
19.20%
4.416
16.376
6.624
4
23
11.52%
2.6496
19.0256
3.9744
5
23
11.52%
2.6496
21.6752
1.3248
6
23
5.76%
1.3248
23
0
Total
15
16
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