Homework Answers
A. Straight Line Method
Depreciation charges = $ 56,000/7 = $ 8000 every year
B. Double Declining Balance
Depreciation charges = $56000*2/7 = $ 16,000
Second year = $(56000-16000)*2/7 = 11428.57
Like wise we can calculate.
In case of sum of years digit add the digit of the years
1+2+3+4+5+6+7 = 28
Depreciation charges of 1st year = $ 56000*7/28 = $ 14,000
Second year = $ 56,000*6/28 = $ 12,000
3rd year = $56000*5/28 = $ 10000
Likewise we can calculate for other years too.
MACRS rate for 7 year property is
1st year 14.29%
2nd year 17.49%
3rd year 24.49%
4th year 12.49%
5th year 8.93%
6th year 8.92%
7th year 8.93%
8th year 4.46%
Multiply these rates with $ 56000 you will get depreciation charges.
Please refer the attached picture
Please contact if having any query thank you.
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