Question

what is an r&d machines depreciation amoint in dollars year 2 if the machine has a three-year life and initial cost of $200,000? the machines value after 3 years is expected to be $50,000.

what is an r&d machines depreciation amoint in dollars year 3 if the machine has a three-year life and initial cost of $200,000? the machines value after 3 years is expected to be $50,000.

Recovery year 3 years 33% Percentage by recovery year“ 5 years 7 years 20% 14% 10 years 10% 25 10 11 Totals 100% 100% 100% 100% "These percentages have been rounded to the nearest whole percent to simplify calculations while retain- ing realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance depreciation using the half-year convention.

Answer 1

(a) Depreciation under SLM Method: (Cost-Salvage value)/Life of the assets (in No. of Years)

Cost of the Asset - 200000/- & Salvage Value - $50,000 Life of the Asset (in years) - 3Yrs

Deprecation in 2nd Year= (200000-50000)/3 = 50,000

Deprecation in 3rd Year= (200000-50000)/3 = 50,000

Depreciation under WDV Method: R=1-(s/c)^(1/n)

Cost of the Asset (C) - $200000 & Salvage Value (S) - $50,000 N=Life of the Asset = 3 Years

Rate of Depreciation (R) = 1-(50000/200000)^(1/3) = 37%

Depreciation - 1st Year - 200000*37% = 74,000/-

2nd Year - (200000-74000)*37% = 46,620/-

3rd Year - (200000- (74000+46620)) = 29,370/-