The company purchased a ship for $850,000. The ship has an estimated residual value of $100,000. Compute the amount of MACRS depreciation deduction for the first two years of the life of the ship.
Depreciation expense this year?
Depreciation expense next year?
Ships belong to 10 year class property under MACRS. Under MACRS, Depreciation rate of 1st year is 10% and 2nd year is 18% for 10 year class property. Under MACRS, asset does not have any residual value.
Depreciation expense this year = $850000 * 10% = $85000
Depreciation expense next year = $850000 * 18% = $153000
The company purchased a ship for $850,000. The ship has an estimated residual value of $100,000....