Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *Switchover to straight-line depreciation. Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.) Tax depreciation for 2020 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2021 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2022 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2023 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2024 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2025 $enter a dollar amount rounded to 0 decimal places
Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *Switchover to straight-line depreciation. Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.) Tax depreciation for 2020 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2021 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2022 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2023 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2024 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2025 $enter a dollar amount rounded to 0 decimal places
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 2RE: Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual...
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Question
Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years.
MACRS |
||||||||||||
Recovery
Year |
3-year
(200% DB) |
5-year
(200% DB) |
7-year
(200% DB) |
10-year
(200% DB) |
15-year
(150% DB) |
20-year
(150% DB) |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
1
|
33.33 | 20.00 | 14.29 | 10.00 | 5.00 | 3.750 | ||||||
2
|
44.45 | 32.00 | 24.29 | 18.00 | 9.50 | 7.219 | ||||||
3
|
14.81* | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 | ||||||
4
|
7.41 | 11.52* | 12.49 | 11.52 | 7.70 | 6.177 | ||||||
5
|
11.52 | 8.93* | 9.22 | 6.93 | 5.713 | |||||||
6
|
5.76 | 8.92 | 7.37 | 6.23 | 5.285 | |||||||
7
|
8.93 | 6.55* | 5.90* | 4.888 | ||||||||
8
|
4.46 | 6.55 | 5.90 | 4.522 | ||||||||
9
|
6.56 | 5.91 | 4.462* | |||||||||
10
|
6.55 | 5.90 | 4.461 | |||||||||
11
|
3.28 | 5.91 | 4.462 | |||||||||
12
|
5.90 | 4.461 | ||||||||||
13
|
5.91 | 4.462 | ||||||||||
14
|
5.90 | 4.461 | ||||||||||
15
|
5.91 | 4.462 | ||||||||||
16
|
2.95 | 4.461 | ||||||||||
17
|
4.462 | |||||||||||
18
|
4.461 | |||||||||||
19
|
4.462 | |||||||||||
20
|
4.461 | |||||||||||
21
|
2.231 | |||||||||||
*Switchover to straight-line depreciation.
|
Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.)
Tax depreciation for 2020
|
$enter a dollar amount rounded to 0 decimal places
|
|
---|---|---|
Tax depreciation for 2021
|
$enter a dollar amount rounded to 0 decimal places
|
|
Tax depreciation for 2022
|
$enter a dollar amount rounded to 0 decimal places
|
|
Tax depreciation for 2023
|
$enter a dollar amount rounded to 0 decimal places
|
|
Tax depreciation for 2024
|
$enter a dollar amount rounded to 0 decimal places
|
|
Tax depreciation for 2025
|
$enter a dollar amount rounded to 0 decimal places
|
Expert Solution
Step 1
Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and tear, obsolescence of time and other reasons.
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