Question

Question 2 (1 point) Genetic Insights Co. purchases an asset for $11,052. This asset qualifies as a seven- year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $3,000. Calculate book value of an asset. Round the answer to two decimals. Your Answer: Answer

Answer 1

Solution:
	Book value of an asset is      1478.76
Working Notes:
Notes:	To get book value of an asset we have to compute accumulated depreciation on the asset then that will be subtracted from cost of the asset to get Book value of the asset on that date.
	In the given case asset is sold at end of the sixth year, so to get book value at end of the sixth year we have to compute accumulated depreciation at the end of 6th year then it will be subtracted from cost of the asset.
	Accumulated depreciation at the end of 6th year
	= cost of the asset x ( sum of depreciation rate under MACRS till 6th year)
	=$11,052 x ( 14.29%+24.49%+17.49%+12.49%+8.93%+8.93%)
	=$11,052 x 86.62%
	=$9,573.24240
At last	Book value of an asset = Cost - Accumulated depreciation at the end of 6th year
	Book value of an asset =$11,052 - $9,573.24240
	Book value of an asset =$1,478.7576
	Book value of an asset =$1,478.76
Please feel free to ask if anything about above solution in comment section of the question.