Question

3. A firm purchased and put in service a new piece to manufacture reusable rockets. The cost basis for the equipment is $250,000. Tabulate annual depreciation deductions and book values for each year using GDS method. Class life = 10. GDS^b = 7. ADS = 10.

Answer 1

Year	Cost basis	Rate	Depreciation for the year		Opening book value	Depreciation expense	Closing book value
1	250,000	14.29%	35,725.00		250,000.00	35,725.00	214,275.00
2	250,000	24.49%	61,225.00		214,275.00	61,225.00	153,050.00
3	250,000	17.49%	43,725.00		153,050.00	43,725.00	109,325.00
4	250,000	12.49%	31,225.00		109,325.00	31,225.00	78,100.00
5	250,000	8.93%	22,325.00		78,100.00	22,325.00	55,775.00
6	250,000	8.92%	22,300.00		55,775.00	22,300.00	33,475.00
7	250,000	8.93%	22,325.00		33,475.00	22,325.00	11,150.00
8	250,000	4.46%	11,150.00		11,150.00	11,150.00	-