Question

very 11-21 The depreciation schedule for an asset, with salvage value of $90 at the end of the recou period, has been computed by several methods. Iden tify the depreciation method used for each schedule Year A B C Year D E 1 $1060.0 2 0 0 0 0 $212.0 339.2 203.5 122.1 122.1 61.1 $424.0 254.4 152.6 91.6 47.4 $194.0 $107.0 194.0 216.0 194.0 324.0 194.0 216.0 194.0 107.0 1060.0 1060.0 970.0 970.0 970.0

Answer 1

A) The entire cost is claimed as Depreciation. This is as per section 179, under which the entire cost of asset can be claimed as Bonus Depreciation in the first year itself.

B) The MACRS 5-Year method is used.

C) The value is decreasing by 40% under Diminishing balance method

D) Straight Line Method. (1060-90)/5 = 194

E) Since the Depreciation increases upto a point and then falls down, the Depreciation is based on the Number of Units Produced.

Please comment in case of any query regarding the solution.