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Problem Calculating Depreciation. A piece of newly purchased industrial equipment costs $870,000 and is classified as seven-yStep-by-step solution Step 1 of 2 A The depreciation schedule is the tabular presentation of annual depreciation charged on aStep 2 of 2 A The asset is classified under 7-year class and the cost of the asset is $715,000. Prepare the depreciation sche

Why is the starting value of $715,000 and not 870,000?

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Answer #1

The solution you have provided seems incorrect. The cost of the asset should be taken $ 870000 and not $ 715000.

Here's the correct solution :-

Year Value at the beginning of the year MACRS Depreciation allowance Value at the end of the year
A B C D = Cost x MACRS rate E = B - D
1 870000 14.29% 124323 745677
2 745677 24.49% 213063 532614
3 532614 17.49% 152163 380451
4 380451 12.49% 108663 271788
5 271788 8.93% 77691 194097
6 194097 8.92% 77604 116493
7 116493 8.93% 77691 38802
8 38802 4.46% 38802 0
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