A piece of newly purchased industrial equipment costs $1,050,000 and is classifi

Question

A piece of newly purchased industrial equipment costs $1,050,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in MACRS Table.   

(MARCs TABLE)

Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Do not round intermediate calculations. Leave no cells blank. Enter "0" when necessary.)

  

   

Required:

Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Do not round intermediate calculations. Leave no cells blank. Enter "0" when necessary.)

Explanation / Answer

Below is the depreciation schedule. To determine the depreciation for each year, multiply the original value by the percentage. Then subtract the depreciation amount each year to determine the new book value for the following year.

Beginning Year Beginning Book Value Depreciation Allowance Ending Book Value 1 $1,050,000.00 $150,045.00 $899,955.00 2 $899,955.00 $257,145.00 $642,810.00 3 $642,810.00 $183,645.00 $459,165.00 4 $459,165.00 $131,145.00 $328,020.00 5 $328,020.00 $93,765.00 $234,255.00 6 $234,255.00 $93,660.00 $140,595.00 7 $140,595.00 $93,765.00 $46,830.00 8 $46,830.00 $46,830.00 $0.00

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