A piece of newly purchased industrial equipment costs $1,140,000 and is classifi

Question

A piece of newly purchased industrial equipment costs $1,140,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in the MACRS Table.
  
Calculate the annual depreciation allowances and end-of-the-year book values for this equipment.
  

Year Beginning
Book Value Depreciation
Allowance Ending Book
Value 1 $ $ $ 2 3 4 5 6 7 8 Property Class 5-Year Year 3-Year 7-Year 33.33% 44.45 14.81 7.41 2 3 4 5 6 20.00% 32.00 19.20 11.52 11.52 5.76 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 8

Explanation / Answer

Statement showing depreciation

MACR depreciation rates are applied on Purchase price only

Year Opening value Depreciation rates Annual depriciation Closing value 1 1140000 14.29% 162906 977094 2 977094 24.49% 279186 697908 3 697908 17.49% 199386 498522 4 498522 12.49% 142386 356136 5 356136 8.93% 101802 254334 6 254334 8.92% 101688 152646 7 152646 8.93% 101802 50844 8 50844 4.46% 50844 0

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