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XYZ Corporation is considering the acquisition of a new piece of equipment. The new equipment costs...

XYZ Corporation is considering the acquisition of a new piece of equipment. The new equipment costs $250,000, plus it will cost $10,000 to ship it to XYZ, and it will cost $5,000 to install it at XYZ. The equipment has a 10-year class life and will be depreciated by the MACRS depreciation system. What amount of depreciation will be expensed in Year 4?

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Answer #1

Depreciable cost of equipment=Purchase price of equipment+ shipping cost+ installation cost

= 250000+ 10,000+ 5000

= 265000

As per MACRS 10 year table, depreciation in Year4 = 11.52%*265000

= 30528

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