A piece of newly purchased industrial equipment costs $1,030,000 and is classifi

Question

A piece of newly purchased industrial equipment costs $1,030,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in MACRS Table. Required: Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Do not include the dollar signs ($). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Leave no cells blank. You must enter "0" for the answer to grade correctly.) Beginning Beginning Depreciation Ending Book Year Book Value Allowance Value 1 2 3 4 5 6 7 8

Explanation / Answer

Year Beginning Book Value MARCS Depreciation Rate Depriciation Ending Book Value
10 1 1080000 14.29% $154,332 $925,668
11 2 925668 24.49% $264,492 $661,176
12 3 661176 17.49% $188,892 $472,284
13 4 472284 12.49% $134,892 $337,392
14 5 337392 8.93% $96,398 $240,994
15 6 240994 8.92% $96,397 $144,597
16 7 144597 8.93% $96,398 $48,199
17 8 48199 4.46% $48,199 $0
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19 (It must be noted that from year 5 the MACRS converts to straight line depriciation method. If we calculate depriciation as per the Exact percentage then we will use the table given below)
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23 Year Beginning Book Value MARCS Depreciation Rate Depriciation Ending Book Value
24 1 1080000 14.29% $154,332 $925,668
25 2 925668 24.49% $264,492 $661,176
26 3 661176 17.49% $188,892 $472,284
27 4 472284 12.49% $134,892 $337,392
28 5 337392 8.93% $96,444 $240,948
29 6 240948 8.92% $96,336 $144,612
30 7 144612 8.93% $96,444 $48,168
31 8 48168 4.46% $48,168 $0

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