Question

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B6 Problem 2: Your firm recently purchased an industrial machine costing 5525,000. It is classified as a seven-year property under MACRS. What are the 87 annual depreciation allowances and end-of-the-year book values for this machine? Finance Concept: For tax purposes, the depreciation expense is computed under MACRS, which was enacted as part of the Tax Reform Act of 1986. The depreciation is larger at the beginning. Depreciation Allowance Ending Book Value 3 Beginning 7 Year Book Value MACRS 14.29% 24.49% 17.49% 12.49% L 8.93% 8.93% 8.93% 4.45% 5 Solution: 1 Enter the Beginning Book Value (cost of the machine) in cell E93. 2 Calculate the remaining Beginning Book Values: enter 19.3. in cell 994 and copy down the column. 3 Calculate the Depreciation Allowance by multiplying SES93 (Beg Bk V) 193 (MACRS). 4 Find the Ending Book Value by subtracting the depreciation from the Beginning Book Value. 5 Copy all your formulas down the columns 6 Year Ending Book Value should equal zero, and beg bk val depreciation in year 8

Answer 1

i have filled out all the boxes as requested but the image might be some what unclear because when i extract it from Excel it is getting like that.

Yea 2 Beginning book value 525,000.00 449,977.50 321,405.00 229,582.50 164,010.00 117,127.50 70,245.00 23,362.50 Depreciation 7 years MACRS allowance 14.29% 75,022.50 24.49% 128,572.50 17.49% 91,822.50 12.49% 65,572.50 8.93% 46,882.50 8.93% 46,882.50 8.93% 46,882.50 4.45% 23,362.50 Ending book value 449,977.50 321,405.00 229,582.50 164,010.00 117,127.50 70,245.00 23,362.50 0.00 8