Question

Brock Florist Company buys a new delivery truck for ​$34,000. 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$2,000.

a.  Calculate the depreciation schedule using a​ five-year life and MACRS depreciation.​ (Round to the nearest​ dollar.)

	Annual Depreciation
Year 1	​$
Year 2	​$
Year 3	​$
Year 4	​$
Year 5	​$
Year 6	​$

b. Calculate the remaining book value at the end of year 4 and the termination value​ (aka. cost recovery or after tax salvage​ value) at the end of year 4 for the delivery truck.

Remaining book value at the end of year 4 is ​$5,875​(Round to the nearest​ dollar.)The termination value​ (cost recovery or after tax salvage​ value) at the endo of year 4 is ​$3,163  ​(Round to the nearest​ dollar.)

Answer 1

Year	Cost of Asset	Applicable Depreciation %	Depreciation Amount	Remaining Book value
1	34000	20%	6800	27200
2	34000	32%	10880	16320
3	34000	19.20%	6528	9792
4	34000	11.52%	3916.8	5875.2
5	34000	11.52%	3916.8	1958.4
6	34000	5.76%	1958.4	0
Remaininhg book value after year 4 = $5875.2
Selling Price = 2000
Loss on Sale = $3875.2
Savings of tax on loss = 3875.2*0.3 = $1162.56
After tax salvage value = 2000+1162.56 = 3162.56
i.e. $3163