pR INIUI VERSION BACK Chapter 9, Problem 015 MACRS-ADS depreciation is only cons

Question

pR INIUI VERSION BACK Chapter 9, Problem 015 MACRS-ADS depreciation is only considered in Section 9.6.1, and no tables are provided in this text. Suppose you have an Injection molding machine for plastic products costing $220,000, and for whatever reason, you decide to depreciate it using MACRS-ADS. It is considered to be in a 7-year property class and yet is depreciated over 11 years if MACRS-ADS is elected. Determine the depreciation percentages to two places after the decimal (e.g.,9.62 percent) and the depreciation allowance for each year. Hint: Don't forget the half-year convention! EOY Depreciation Allowance Depreciation Percenta

Explanation / Answer

Explanations:

Depreciation in year 1 = 100%/11 years*1/2 = 4.5454 or 4.55% (rounded off)

Depreciation in year 2 = 100%/11 = 9.0909% or 9.09% (rounded off)

Similarly depreciation rates for other years have been computed.

Book value at the end of the year = book value at the start of the year - depreciation allowance for the year

EOY Depreciation allownace Book value Depreciation % 0 0.00 220,000.00 0.00 1 10,000.00 210,000.00 4.55 2 20,000.00 190,000.00 9.09 3 20,000.00 170,000.00 9.09 4 20,000.00 150,000.00 9.09 5 20,000.00 130,000.00 9.09 6 20,000.00 110,000.00 9.09 7 20,000.00 90,000.00 9.09 8 20,000.00 70,000.00 9.09 9 20,000.00 50,000.00 9.09 10 20,000.00 30,000.00 9.09 11 20,000.00 10,000.00 9.09 12 10,000.00 0.00 4.55

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

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