Question

A small delivery truck was purchased on January 1 at a cost of $25,000. It has an estimated useful life of four years and an estimated salvage value of $5,000. Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated cost recovery system but For tax purposes, assume that the truck has a useful life of five years. (The IRS schedule will spread depreciation over six years. Accum. depr. end of Yr. 2:$13,000

Answer 1

Depreciation Depreciation Accumulated Year Cost of Truck Book Value Rate Expense Depreciation 0 25000 25000 25000 20.00% 32.00% 19.20% 5000 8000 4800 2200 5000 13000 17800 20000 25000 20000 12000 7200 5000 4 Depreciation in Year 4 is adjusted to achieve the required salvage value