Question

In: Accounting

Show work by hand Determine the depreciation deduction for the fourth year for an asset with...

Show work by hand

Determine the depreciation deduction for the fourth year for an asset with a cost basis of $50,000 and market value of $15,000 at the end of its ten-year useful life. Use the GDS (MACRS) and ADS (MACRS) methods to calculate the depreciation.

Solutions

Expert Solution

1. Calculation of MACRS Depreciation as per GDS
In MACRS salvage value is not considered. Hence we have to depreciate cost of the asset as per rate for year 4 prescribed in table.
Year Cost of assset MACRS Depreciation Percentage ( For 10 years life asset) Depreciation (Cost * Depreciation Percentage)
          4.00                  50,000.00                                 11.52                             5,760.00
2. Calculation of MACRS Depreciation as per ADS
Year Cost of assset MACRS Depreciation Percentage ( For 10 years life asset) Depreciation (Cost * Depreciation Percentage)
          4.00                  50,000.00                                 10.02                             5,010.00
Working:
Di = C × Ri

Where,
Di is the depreciation in year i,
C is the original purchase price, or basis of an asset
Ri is the depreciation rate for year i, depends on the asset's cost recovery period

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

1.      A company anticipates a depreciation deduction of $70,000 in year 4 of a project. The...
1.      A company anticipates a depreciation deduction of $70,000 in year 4 of a project. The company's tax rate is 40% and its discount rate is 12%. The present value of the depreciation tax shield resulting from this deduction is closest to:           A)     $17,808           B)     $29,000           C)     $21,000           D)     $13,356 2.      (Ignore income taxes in this problem.) Nevland Corporation is considering the purchase of a machine that would cost $120,000 and would last for 6 years....
T-TEST (show work) ( no hand written work it is hard to read) A researcher wishes...
T-TEST (show work) ( no hand written work it is hard to read) A researcher wishes to determine if the college students with a “B” average have attain more flying hours by the end of their first semester of college than those that do not have a “B” average at the end of the first semester. The researcher surveys 20 college students that are also student pilots and records their flight hours as well as their GPA (noted as “below...
Determine the amount of the standard deduction for each of the following taxpayers for tax year...
Determine the amount of the standard deduction for each of the following taxpayers for tax year 2019: Christina, who is single. Adrian and Carol, who are filing a joint return. Their son is blind. Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. Karen, who earned $1,100 working a part-time job. She can be claimed as a dependent by her parents. Rodolfo, who is over 65 and is single. Bernard, who is a...
Determine the amount of the standard deduction for each of the following taxpayers for tax year...
Determine the amount of the standard deduction for each of the following taxpayers for tax year 2017: Christina, who is single. Adrian and Carol, who are filing a joint return. Their son is blind. Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. Karen, who earned $1,100 working a part-time job. She can be claimed as a dependent by her parents. Rodolfo, who is over 65 and is single. Bernard, who is a...
determine the amount of the standard deduction for each of the following taxpayers for tax year...
determine the amount of the standard deduction for each of the following taxpayers for tax year 2017 a. Christina, who is single. b. A drain and Carol, who are filling a joint return. their son is blind. c. Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. d. Karen, who earned $1100 working a part-time job. she can be claimed as a dependent by her parents. e. Rodolfo, who is over65 and is...
The changes in the current asset and liability accounts for the year are as follows: Depreciation...
The changes in the current asset and liability accounts for the year are as follows: Depreciation expense $48,500 Gain on disposal of equipment 26,900 Net income 577,400 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $8,190 Inventory (4,280) Prepaid insurance (2,020) Accounts payable (7,000) Income taxes payable 1,390 Dividends payable 2,480 Required: A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows <javascript:void(0)>, using...
Determine whether the following taxpayers are eligible for the QBI deduction and the deduction amount (if...
Determine whether the following taxpayers are eligible for the QBI deduction and the deduction amount (if any). Cathy is married and files a joint return with her spouse. Cathy operates a small family restaurant as a sole proprietor. She pays wages of $70,000 and the QBI from the restaurant is $100,000. Cathy’s spouse has wages of $250,000 and their joint taxable income is $364,000. Is Cathy eligible for QBI deduction? Answer yes or no If eligible, how much is the...
Please show all work and provide explanations Prepare a depreciation schedule showing depr. exp., accumulated depreciation...
Please show all work and provide explanations Prepare a depreciation schedule showing depr. exp., accumulated depreciation and ending book value, year-by-year. 3 schedules for the 3 methods straight-line, units-of-production, double declining basis. Asset is a delivery Truck. Est. Life ………… 5 Orig. Cost Basis 24,500.00 Est. Residual Value 2,500.00 Est. total mileage 100,000 miles driven, Yr 1 21,400 miles driven, Yr 2 19,700 miles driven, Yr 3 18,900 miles driven, Yr 4 23,400 miles driven, Yr 5 16,600 Part 2:...
Show all the steps At December 31, 2017, Cord Company's plant asset and accumulated depreciation and...
Show all the steps At December 31, 2017, Cord Company's plant asset and accumulated depreciation and amortization accounts had balances as follows: Category Plant Asset Accumulated Depreciation and Amortization Land $ 166,000 $ — Buildings 1,050,000 319,900 Machinery and equipment 675,000 308,500 Automobiles and trucks 163,000 91,325 Leasehold improvements 198,000 99,000 Land improvements — — ​Depreciation methods and useful lives: Buildings—150% declining balance; 25 years. Machinery and equipment—Straight line; 10 years. Automobiles and trucks—150% declining balance; 5 years, all acquired...
Calculate (show how) the annual depreciation expense, accumulated depreciation, and after tax salvage value associated with an asset given the following information:
Calculate (show how) the annual depreciation expense, accumulated depreciation, and after tax salvage value associated with an asset given the following information:Initial value of asset (including shipping and installation): $12 millionThe company uses straight line depreciation to depreciate the asset to a book value of $2 million by the end of the life of the project which is ten years.Expected salvage value (market price) of the asset upon termination of project: $3.2 million.Marginal tax rate: 30%
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT