Wednesday, 9 July 2014

A piece of newly purchased industrial equipment costs $984,000 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-year book values for this equipment. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. (e.g., 32.16))

A piece of newly purchased industrial equipment costs $984,000 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-year book values for this equipment. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. (e.g., 32.16))

Year Beginning Book Value Depreciation Ending book Value
1 $ $ $  
2 $ $ $  
3 $ $ $  
4 $ $ $  
5 $ $ $  
6 $ $ $  
7 $ $ $  
8 $ $ $  



Explanation:
The ending book value for any year is the beginning book value minus the depreciation for the year. Remember, to find the amount of depreciation for any year, you multiply the purchase price of the asset times the MACRS percentage for the year. The beginning book values and MACRS percentages are:

Year Beginning Book Value MACRS
1 $ 984,000.00 0.1429
2 843,386.40 0.2449
3 602,404.80 0.1749
4 430,303.20 0.1249
5 307,401.60 0.0893
6 219,530.40 0.0892
7 131,757.60 0.0893
8 43,886.40 0.0446