Question

a reas of Corporate X CLO2 Scaleating Depreciation X Untitled document Google Docs 1Vg7bD40X71XkY2obgWY-YaPm8pe2E35LNB/edit Tools Add-ons Help et - Georgia All changes saved in Drive - 18 - BIVA A EEE E...* A piece of newly purchased industrial equipment costs $745,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. DELL

Answer 1

Equipment Cost : $745,000

As it is classified as a 7 Year property under MACRS, the method and convention of depreciation is ''200% Declining Balance (DB) /Half Year''

Under the 200%DB/Half-Year, the rate of Depreciation for a property classified as a 7 year property is 14.29%.

Therefore, the Depreciation for the first year can be calculated as follows:

$745,000 * 14.29% = $106,460.5 or $106,461 (Round off)

The end of the year book value for the Equipment is, Book value - Depreciation

= $745,000 - $106,461 = $638,539