Question

A piece of newly purchased industrial equipment costs $978,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7 Calculate the annual depreciation allowances and end-of-the-vear book values for this equipment (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Year Beginning Book Value Depreciation Ending book Value د ta یه ن in in ه ا on ی بد EA in an A و c

Answer 1

Solution 1
Year	Beginning book value	Depreciation rate	Depreciation	Ending book value
	A	B	C=$ 9,78,000*B	D=A-C
1	$                      978,000.00	14.29%	$          139,756.20	$         838,243.80
2	$                      838,243.80	24.49%	$          239,512.20	$         598,731.60
3	$                      598,731.60	17.49%	$          171,052.20	$         427,679.40
4	$                      427,679.40	12.49%	$          122,152.20	$         305,527.20
5	$                      305,527.20	8.93%	$            87,335.40	$         218,191.80
6	$                      218,191.80	8.92%	$            87,237.60	$         130,954.20
7	$                      130,954.20	8.93%	$            87,335.40	$           43,618.80
8	$                         43,618.80	4.46%	$            43,618.80	$                          -
Solution 2
Year	Beginning book value	Depreciation rate	Depreciation	Ending book value
	A	B	C=$ 6,000,000*B	D=A-C
1	$                         6,000,000	20.00%	$            1,200,000	$           4,800,000
2	$                         4,800,000	32.00%	$            1,920,000	$           2,880,000
3	$                         2,880,000	19.20%	$            1,152,000	$           1,728,000
4	$                         1,728,000	11.52%	$                691,200	$           1,036,800
	WDV at the end of 4 year	$          1,036,800
	Selling price	$          1,200,000
	Gain	$              163,200
	Tax @ 34%	$                55,488	(163200*34%)
	Selling price after tax	$          1,144,512	(1,200,000-55,488)