Question

A piece of newly purchased industrial equipment costs $1,020,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in MACRS Table.

Required:

Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. (Do not include the dollar signs ($). Enter rounded answers as directed, but do not use the rounded numbers in intermediate calculations. Leave no cells blank. You must enter "0" for the answer to grade correctly.)

  

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

Answer 1

	Year	Beginning Book Value	MARCS Depreciation Rate	Depriciation allowance	Ending Book Value
	1	1020000	14.29%	$1,54,332	$8,65,668
	2	865668	24.49%	$2,64,492	$6,01,176
	3	601176	17.49%	$1,88,892	$4,12,284
	4	412284	12.49%	$1,34,892	$2,77,392
	5	277392	8.93%	$96,398	$1,80,994
	6	180994	8.92%	$96,397	$84,597
	7	84597	8.93%	$96,398	-$11,801
	8	-11801	4.46%	$48,199	-$60,000
	(It must be noted that from year 5 the MACRS converts to straight line depriciation method. If we calculate depriciation as per the Exact percentage then we will use the table given below)
	Year	Beginning Book Value	MARCS Depreciation Rate	Depriciation	Ending Book Value
	1	1080000	14.29%	$1,54,332	$9,25,668
	2	925668	24.49%	$2,64,492	$6,61,176
	3	661176	17.49%	$1,88,892	$4,72,284
	4	472284	12.49%	$1,34,892	$3,37,392
	5	337392	8.93%	$96,444	$2,40,948
	6	240948	8.92%	$96,336	$1,44,612
	7	144612	8.93%	$96,444	$48,168
	8	48168	4.46%	$48,168	$0