A piece of newly purchased industrial equipment costs $980,000 and is classified

Question

A piece of newly purchased industrial equipment costs $980,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment.

A piece of newly purchased industrial equipment costs $980,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment.

Explanation / Answer

Year Beginning Book Value Depreciation (MACRS Rate*Asset cost) Ending book Value 1 $                     980,000 $                                               140,042 $               839,958 2 $                     839,958 $                                               240,002 $               599,956 3 $                     599,956 $                                               171,402 $               428,554 4 $                     428,554 $                                               122,402 $               306,152 5 $                     306,152 $                                                 87,514 $               218,638 6 $                     218,638 $                                                 87,416 $               131,222 7 $                     131,222 $                                                 87,514 $                 43,708 8 $                       43,708 $                                                 43,708 $                        -

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