Depreciation In early 2015, Sosa Enterprises purchased a new machine for $ 12 co
ID: 2773792 • Letter: D
Question
DepreciationIn early 2015, Sosa Enterprises purchased a new machine for
$ 12 comma 000$12,000
to make cork stoppers for wine bottles. The machine has a 3-year recovery period and is expected to have a salvage value of
$ 1 comma 970$1,970.
Develop a depreciation schedule for this asset using the MACRS depreciation percentages in the table
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Complete the depreciation schedule for the asset below:
(Round the percentage to the nearest integer and the depreciation to the nearest dollar.)
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
Bold left parenthesis 1 right parenthesis times left parenthesis 2 right parenthesis(1)×(2)
1
$ 12 comma 000$12,000
(Round the percentage to the nearest integer and the depreciation to the nearest dollar.)
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
Bold left parenthesis 1 right parenthesis times left parenthesis 2 right parenthesis(1)×(2)
2
$ 12 comma 000$12,000
(Round the percentage to the nearest integer and the depreciation to the nearest dollar.)
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
Bold left parenthesis 1 right parenthesis times left parenthesis 2 right parenthesis(1)×(2)
3
$ 12 comma 000$12,000
(Round the percentage to the nearest integer and the depreciation to the nearest dollar.)
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
Bold left parenthesis 1 right parenthesis times left parenthesis 2 right parenthesis(1)×(2)
4
$ 12 comma 000$12,000
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
Bold left parenthesis 1 right parenthesis times left parenthesis 2 right parenthesis(1)×(2)
1
$ 12 comma 000$12,000
nothing% $ nothingExplanation / Answer
The requirement of the question is to complete the depreciation schedule for 4 years. The life of the asset may be assumed as 4 years.
Annual depreciation = Cost of the assets / Life of the asset = $12,000 / 4 = $3,000
Rate of depreciation = $3,000 / $12,000 = 0.25 = 25%
Hence, depreciation schedule may be completed as below:
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
(1)×(2)
1
$12,000
25%
$3,000
2
$12,000
25%
$3,000
3
$12,000
25%
$3,000
4
$12,000
25%
$3,000
Depreciation Schedule
Year
Cost
(1)
Percentage
(2)
Depreciation
(1)×(2)
1
$12,000
25%
$3,000
2
$12,000
25%
$3,000
3
$12,000
25%
$3,000
4
$12,000
25%
$3,000
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