TABLE 7-4 MACRS (GDS) Property Classes and Primary Methods for Calculating Depreciation Deductions Class Life GDS Property Class and Depreciation Method 3-year, 200% DB with switchover to SL (Useful Life) Special Rules Four years or Includes some race horses and tractor less units for over-the-road use. Includes cars and light trucks, semiconductor manufacturing equipment, qualified technological equipment, computer-based central office switching equipment, some renewable and biomass power facilities, and research and development property. 10 years to less Includes single-purpose agricultural and horticultural structures and 5-year, 200% DB with switchover to SL More than 4 years to less than 10 7-year, 200% DB with switchover to SL than 16 railroad track. Includes office furniture and fixtures, and property not assigned to a property class. 10-year, 200% DB with 16 years to less Includes vessels, barges, tugs, and similar water transportation equipment. 20 years to less Includes sewage treatment plants, telephone distribution plants, and equipment for two-way voice and data communication. switchover to SL than 20 15-year, 150% DB with switchover to SL than 25 Excludes real property of 27.5 years or more. Includes municipal sewers. 25 years or 20-year, 150% DB with switchover to SL more 27.5 year, SL N/A Residential rental property. 39-year, SL N/A Nonresidential real property. Source: IRS Publication 946. Depreciation. Washington, D.C.: U.S. Government Printing Office, for 2016 tax returns.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter7: Fixed Assets, Natural Resources, And Intangible Assets

Section: Chapter Questions

Problem 7.18E: Book value of fixed assets Apple. Inc., designs, manufactures, and markets personal computers...

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Question

A firm purchased and placed in service a new piece of semiconductor
manufacturing equipment. The cost basis for the equipment is $100,000.
Determine (a) the depreciation charge permissible in the fourth year, (b) the BV at the end of the fourth year, (c) the cumulative depreciation through the third year, (d) the BV at the end of the fifth year if the equipment is disposed of at that time.

TABLE 7-4 MACRS (GDS) Property Classes and Primary Methods
for Calculating Depreciation Deductions
Class Life
GDS Property Class and
Depreciation Method
3-year, 200% DB with
switchover to SL
(Useful Life)
Special Rules
Four years or
Includes some race horses and tractor
less
units for over-the-road use.
Includes cars and light trucks,
semiconductor manufacturing
equipment, qualified technological
equipment, computer-based
central office switching equipment,
some renewable and biomass
power facilities, and research and
development property.
10 years to less Includes single-purpose agricultural
and horticultural structures and
5-year, 200% DB with
switchover to SL
More than 4
years to less
than 10
7-year, 200% DB with
switchover to SL
than 16
railroad track. Includes office
furniture and fixtures, and property
not assigned to a property class.
10-year, 200% DB with
16 years to less Includes vessels, barges, tugs,
and similar water transportation
equipment.
20 years to less Includes sewage treatment plants,
telephone distribution plants, and
equipment for two-way voice and
data communication.
switchover to SL
than 20
15-year, 150% DB with
switchover to SL
than 25
Excludes real property of 27.5 years or
more. Includes municipal sewers.
25 years or
20-year, 150% DB with
switchover to SL
more
27.5 year, SL
N/A
Residential rental property.
39-year, SL
N/A
Nonresidential real property.
Source: IRS Publication 946. Depreciation. Washington, D.C.: U.S. Government Printing Office, for
2016 tax returns.

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