**Please include all steps** Stahmann Products paid $350,000 for a numerical con

Question

**Please include all steps**

Stahmann Products paid $350,000 for a numerical controller during the last month of 2007 and had it installed at a cost of $50,000. The recovery period was 7 years with an estimated salvage value of 10% of the original purchase price. Stahmann sold the system at the end of 2011 for $45,000.

( a) What numerical values are needed to develop a depreciation schedule at purchase time?

( b) State the numerical values for the following: remaining life at sale time, market value in 2011, book value at sale time if 65% of the basis had been depreciated.

Explanation / Answer

Part a)

Following values are needed to compute depreciation:

Part b)

Remaining life at sale time = 7 –(2011-2007) = 3 years

Market value in 2011 = 45000

Book value at sale time= cost of remaining basis

                                                = 400,000 x (1-0.65)

                                                = 140,000

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