Find the book value for the asset shown in the accompanying table, assuming that

Question

Find the book value for the asset shown in the accompanying table, assuming that MACRS depreciation is being used Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Book value Recovery period (years) Elapsed time since purchase (years) Percentage by recovery year 10 years 10% 18% 14% 12% 9% 8% 7% 6% 6% 6% 4% 100% 7 years 14% years 33% 45% 15% 7% 5 years 20% 32% 19% Asset Installed cost Recovery year S802,000 18% 12% 9% 5% 5% 4% (Round to the nearest dollar.) The remaining book value is 12% 5% 6 10 100% 100% 100% Totals These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention.

Explanation / Answer

Answer: Tt comes in the second property class i.e. 5 year recovery period

total cost of the asset is $802000.

For the first year depreciation amount would be 802000*0.20 (from the table) = $160400

Subtract this amount from 802000 to get remaining book value after year 1 802000-160400 = $641600

similarly for year 2, depreciation amount would be calculated as (asset value * depreaciation % according to MACRS)

802000*0.32 = $256640

Remaining book value after 2 years would be $641600 -$256640 = $384960

Remaining book value is $384960

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.