Question

Brock Florist Company buys a new delivery truck for $37,000. It is classified as a light-duty truck the tax rate is 0.3 a. Calculate the depreciation schedule using a five-year life and MACRS depreciation b. Calculate the remaining book value at the end of year 4 and the termination value (aka cost recovery or after tax salvage value) for the delivery truck if the truck can be sold at the end of year 4 for $8,000 a. Calculate the depreciation schedule using a five-year life and MACRS depreciation (Round to the nearest dolar) Annual Depreciation Year 1 $ Year 2 Year 3 Year 4 s Year 5 Year 6 SC b. Calculate the remaining book value at the end of year and the termination value (aka cost recovery or after tax salvage value) at the end of year for the delivery truck

Answer 1

@ Purchase Potice of new delivery Touck = $37,000 Depreciation schedule using a 5 year MACKS Schedule Rate Year Depreciation 0.2000 il Depreciation Amount $37,000X0.2000 = $ 7,400 Year 2 0. 3200 $37,000 70.3200 = $11,840 Year 3 0.1920 $37,00080.1420= $7,104 Усан ч 0,1152 $37,000 X0.1152= $4,262.40 $37,0008 0.1152 = $4,262.40 Year 5 a 0,1152 Year 6 0.0576 $ 37,000X0.0576= $2,131.20 (6) . Calculate After Tax sale value of Truck salvage value in at the end of year 4 = $8,000 Remaining Book value of truct at the end of year 4 Purchase price - f Accumulated Depreciation upto 4 years]

3 $ 37,000 - $7,400+ $1184 0f $ 7,104 + $4,262.40] = $37,000-[ $30,606:40] = $6, 393.60 Og $ 6,394 capboox) After Tax salvage value Sawage value -f Tax Rete ( Selvage value- Remaining Book value)] 2 $ 8;000-[ 0.3 ($8,000 - $6,39477 = $8,000 - [ 0-3($1,606)] = $8,000 – $48118 = $ 7,518.20 or $7,518 (approx) oo 00 -