Question

Problem 2 – 10 points

Company B purchased equipment that cost 750,000 with salvage value of 150,000 after 10 year for both plant in the United States and Hong Kong. MACRS depreciation with n=5 year is applied in the United States and standard SL depreciation with n=10 years is used in Hong Kong.

1. Develop and graph the book value for both plants.
2. If the equipment is sold after year 10 for 100,000, find the over or under depreciated amounts for each plant.

Please use Excel to answer

Answer 1

H23 A B C D E F G H I J K L M N O P Q R S A Company B MACRS depreciation method Co in US Co in Hong Kong sales valu 100000 recovery years 5 year 1 20% 32% 3 19.20% 4 11.52% 5 11.52% 6 5.76% depreciation book value 150000 600000 240000 360000 144000 216000 86400 129600 86400 43200 43200 0 Book valu 150000 recovery year depreciation book value 60000 690000 60000 630000 60000 570000 60000 510000 60000 450000 60000 390000 60000 330000 60000 270000 60000 210000 60000 150000 5.00 vai WN under depreciation 50000 depreciation=cost * percentage under depreciation : sales value - book value book value=cost-depreciation sales valu 100000 depreciation = (cost - salvage value)/10 Book valu book value=cost-depreciation over depreciation over depreciation = 100000 sales value-book value