Name: 4. The ops is 3 years, value at the end of year 3. A company is trying to

Question

Name: 4. The ops is 3 years, value at the end of year 3. A company is trying to evaluate how much op has a book value of $300. The double declining balance (DDB) depreciation results of accelerated tests showed that the average useful life of most lapt and have a $50 salvage their laptops have depreciated. According to the straight line (SL) depreciation year old lapt values the values at $177.76 a. Determine the first cost of the laptop. same laptop at $88.89 and the modified accelerated cost recovery system (MACRS) Depreciation rate for the MACRS with n=3 is 33.33% in year 1, 44.45% in year 2, and 14.81% in year 3, Determine the book value in year 3 (BVs) for SL, DDB, and MACRS, and compare with the salvage value. Explain the reason for difference, if any. c. If laptops are taxable, which depreciation method is more appropriate? Why?

Explanation / Answer

Double dep method is more appropriate

SL DDB MARCS 33.33% 0.6666 Op value 900 900 900 salvage 50 50 50 after dep 850 850 yr 1     283.31     599.94     283.31 yr 2     283.31     200.02     377.83 yr 3     283.31        66.69     125.89     849.92     866.65     787.02 Dep        50.09        33.35     112.99 Dep as given in quest 300 88.89 177.76

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