Depreciation A firm is evaluating the acquisition of an asset that costs $69,800 and requires $3,830 in installation costs. If the firm depreciates the asset under MACRS, using a 5-year recovery period (see table ), determine the depreciation charge for each year. The annual depreciation expense for year 1 will be $. (Round to the nearest dollar.) O Data Table The annual depreciation expense for year 2 will be $. (Round to the nearest dollar.) The annual depreciation expense for year 3 will be $. (Round to the nearest dollar.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) The annual depreciation expense for year 4 will be $. (Round to the nearest dollar.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes The annual depreciation expense for year 5 will be $. (Round to the nearest dollar.) Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years The annual depreciation expense for year 6 will be $. (Round to the nearest dollar.) 1 33% 20% 14% 10% 45% 32% 25% 18% 3 15% 19% 18% 14% 7% 12% 12% 12% 5 12% 5% 9% 9% 6 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% 100% 100% 100% 100% Totals *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Print Done
Depreciation A firm is evaluating the acquisition of an asset that costs $69,800 and requires $3,830 in installation costs. If the firm depreciates the asset under MACRS, using a 5-year recovery period (see table ), determine the depreciation charge for each year. The annual depreciation expense for year 1 will be $. (Round to the nearest dollar.) O Data Table The annual depreciation expense for year 2 will be $. (Round to the nearest dollar.) The annual depreciation expense for year 3 will be $. (Round to the nearest dollar.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) The annual depreciation expense for year 4 will be $. (Round to the nearest dollar.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes The annual depreciation expense for year 5 will be $. (Round to the nearest dollar.) Percentage by recovery year Recovery year 3 years 5 years 7 years 10 years The annual depreciation expense for year 6 will be $. (Round to the nearest dollar.) 1 33% 20% 14% 10% 45% 32% 25% 18% 3 15% 19% 18% 14% 7% 12% 12% 12% 5 12% 5% 9% 9% 6 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% 100% 100% 100% 100% Totals *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Print Done
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 13PB: Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Depreciation A firm is evaluating the acquisition of an asset that costs $69,800 and requires $3,830 in installation costs. If the firm depreciates the asset under MACRS, using a 5-year recovery period (see table 9), determine the depreciation charge
for each year.
Data Table
The annual depreciation expense for year 1 will be $
(Round to the nearest dollar.)
The annual depreciation expense for year 2 will be $
(Round to the nearest dollar.)
(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a
The annual depreciation expense for year 3 will be $
(Round to the nearest dollar.)
spreadsheet.)
The annual depreciation expense for year 4 will be $
(Round to the nearest dollar.)
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
The annual depreciation expense for year 5 will be $
Percentage by recovery year*
5 years
(Round to the nearest dollar.)
Recovery year
3 years
7 years
10 years
The annual depreciation expense for year 6 will be $
(Round to the nearest dollar.)
1
33%
20%
14%
10%
2
45%
32%
25%
18%
3
15%
19%
18%
14%
4
7%
12%
12%
12%
12%
9%
9%
5%
9%
8%
7
9%
7%
4%
6%
6%
10
6%
11
4%
Totals
100%
100%
100%
100%
*These percentages have been rounded to the nearest whole percent to simplify calculations while
retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual
unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year
convention.
Print
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