Question

A Kenworth road tractor purchased by Rio Corporation cost $88,500. This item will be used for business 100% of the time. Accountants elected to take no section 179 deduction and utilize the special depreciation allowance of 30%. Prepare a depreciation schedule using the MACRS method and enter the accumulated depreciation at the end of year 3 as your answer. Round all dollar amounts to the nearest cent

(NEED ANSWER BY 11:30PM PLEASE)

Answer 1

Formula sheet

A	B	C	D	E	F	G	H	I	J	K
2
3		All vehicles fall under MACRS 5 year depreciation.
4		Cost basis	88500
5		Since special depreciation allowance for 30% has been taken, therefore new cost basis can be calculated as follows:
6		New Cost Basis	=$88500 - 88500*30%
7			=$88500 - $26,550
8			=D4-D4*30%
9
10		Year	Cost Basis	x	Depreciation rate	Computed Depreciation	Accumulated Depreciation
11		Year 1	88500	x	0.3	=D11*F11
12			=D11-G11	x	0.2	=D12*F12	=G12+G11
13		Year 2	=D12	x	0.32	=D13*F13	=G13+H12
14		Year 3	=D13	x	0.192	=D14*F14	=G14+H13
15		Year 4	=D14	x	0.1152	=D15*F15	=G15+H14
16		Year 5	=D15	x	0.1152	=D16*F16	=G16+H15
17		Year 6	=D16	x	0.0576	=D17*F17	=G17+H16
18
19		Hence accumulated depreciation in year 3	=H14
20