Del Norte Brick Co. is located near the intersection of Texas, New Mexico, and M

Question

Del Norte Brick Co. is located near the intersection of Texas, New Mexico, and Mexico. Improved access to the company’s property is via a small bridge across the Rio Grande. The cost of the bridge was $860,000. Determine the depreciation and book value for year 3 according to the MACRS (Modified Accelerated Cost Recovery System) method.

The depreciation is determined to be $ .

The book value is determined to be $ .

Depreciation Rate() for Each MACRS Recovery Period in Years 3 n=5 n=7 14.29 24.49 17.49 12.49 8.93 n 20 3.75 7.22 6.68 6.18 5.71 20.00 44.45 14.81 7.41 19.20 11.52 11.52 10.00 18.00 14.40 11.52 9.22 5.00 9.50 8.55 7.70 6.93 5.76 8.92 8.93 4.46 7.37 6.55 6.55 6.23 5.90 5.90 5.91 5.90 5.29 4.89 4.52 4.46 4.46 10 6.55 4.46 4.46 4.46 4.46 4.46 3.28 5.91 5.90 5.91 5.90 5.91 12 15 16 17-20 21 4.46 4.46 2.95

Explanation / Answer

The property (bridge)is classified under 15year GDS class property .

Depreciation for year 3 : Cost *3rd year depreciaion rate
                     = 860000 * 8.55%

                    = $ 73530

Accumulated depreciation till year3 = 5 % +9.5%+8.55% = 23.05%

B)Book value at year3 =cost [1-Accumulated depreciation]

         = 860000[1-.2305]

         = 860000 * .7695

        = $ 661770

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