Question
In: Finance
Woodland Lake Manufacturing has a new project that requires $652,000 of equipment. What is the depreciation...
Woodland Lake Manufacturing has a new project that requires
$652,000 of equipment. What is the depreciation in Year 5 of this
project if the equipment is classified as seven-year property for
MACRS purposes? The MACRS allowance percentages are as follows,
commencing with year 1: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92,
8.93, and 4.46 percent.
Solutions
Expert Solution
Depreciation in Year 5 is $ 58,223.60
| Depreciation Schedule under MACRS method: | |||||
| Year | Cost | Depreciation rate | Depreciation expense | Accumulated Depreciation expense | Book Value at the end of year |
| 1 | $ 6,52,000 | 14.29% | $ 93,170.80 | $ 93,170.80 | $ 5,58,829.20 |
| 2 | $ 6,52,000 | 24.49% | $ 1,59,674.80 | $ 2,52,845.60 | $ 3,99,154.40 |
| 3 | $ 6,52,000 | 17.49% | $ 1,14,034.80 | $ 3,66,880.40 | $ 2,85,119.60 |
| 4 | $ 6,52,000 | 12.49% | $ 81,434.80 | $ 4,48,315.20 | $ 2,03,684.80 |
| 5 | $ 6,52,000 | 8.93% | $ 58,223.60 | $ 5,06,538.80 | $ 1,45,461.20 |
| 6 | $ 6,52,000 | 8.92% | $ 58,158.40 | $ 5,64,697.20 | $ 87,302.80 |
| 7 | $ 6,52,000 | 8.93% | $ 58,223.60 | $ 6,22,920.80 | $ 29,079.20 |
| 8 | $ 6,52,000 | 4.46% | $ 29,079.20 | $ 6,52,000.00 | $ 00.00 |
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