Question1 A lumber company purchases and installs a wood chipper for $200,000. T

Question

Question1 A lumber company purchases and installs a wood chipper for $200,000. The chipper is classified as MACRS 7-year property. The chipper's useful life is 12 years. The estimated salvage value at the end of 12 years is $26,500. Using Straight Line depreciation, compute the first year depreciation. $26,500.00 $28,571.43 $16,666.67 $14,458.33 Click here to access the MACRS-GDS Table Calculator Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT LINK TO TEXT

Explanation / Answer

Solution:

Cost of the wood chipper= $200000

Useful life= 12 years

Salvage value= $26500

Depreciation at the end of 1st year (D1) = (cost-salvage value)/ useful life

= ($200000 - $26500)/12

= $14458.33333333333

= $14458.33

So answer is $14458.33

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