Question
In: Finance
A machine is classified as a ten-year MACRS property. Compute the book value for tax purposes...
A machine is classified as a ten-year MACRS property. Compute the book value for tax purposes at the end of five years. The cost basis is $225,000.
Solutions
Expert Solution
We can also add the sum of first 5 percentages of MACRS and find depreciation and deduct from the cost.
i.e 10% + 18% + 14.40% + 11.52% + 9.22% = 63.14%
Depreciation = Cost of Asset * Rate of Depreciation
= $225,000 * 63.14% = $142,065
Book value at the end of five years = Cost of Asset - Depreciation
=$225,000 - $142,065 = $82,935
MACRS Table for your reference:
jeff jeffy answered 1 year agoRelated Solutions
A. A fixed asset is classified as 5-year MACRS property and has an initial cost of...
A.
A fixed asset is classified as 5-year MACRS property and has an
initial cost of $41,000 What is the aftertax cash flow from the
sale of this asset if the pre-tax salvage value at the end of year
3 is $17,500 and the tax rate is 34 percent?
Year
Five-Year
Property Class
1
20.00
%
2
32.00
3
19.20
4
11.52
5
11.52
6
5.76
$15,439.38
$15,558.04
$15,564.72
$15,463.06
B.
A firm has sales for the...
4) Compute the depreciation and book value each year of a machine that costs $67,000 to...
4) Compute the depreciation and book value each year of a
machine that costs $67,000 to purchase and $3,000 to install with
an 8-year life. Use the double declining balance method with
switching to straight line depreciation. (a) Fill
out the following table, assuming a $1,000 salvage value.
(b) What would be D7 if the salvage value was
$18,000?
n
Dn
Bn
DBB
SL
0
1
2
3
4
5
6
7
8
Compute the depreciation and book value each year of a machine that costs $67,000 to purchase...
Compute the depreciation and book value each year of a machine
that costs $67,000 to purchase and $3,000 to install with an 8-year
life. Use the double declining balance method with switching to
straight line depreciation. (a) Fill out the
following table, assuming a $1,000 salvage value.
(b) What would be D7 if the salvage value was
$18,000?
n
Dn
Bn
DDB
SL
0
1
2
3
4
5
6
7
8
An asset used in a four-year project falls in the five-year MACRS class for tax purposes....
An asset used in a four-year project falls in the five-year
MACRS class for tax purposes. The asset has an acquisition cost of
$6,050,000 and will be sold for $1,250,000 at the end of the
project. If the tax rate is 25 percent, what is the aftertax
salvage value of the asset? Refer to Table 8.3. (Do not
round intermediate calculations and enter your answer in dollars,
not millions of dollars, rounded to 2 decimal places, e.g.,
1,234,567.89.)
An asset used in a four-year project falls in the five-year MACRS class for tax purposes....
An asset used in a four-year project falls in the five-year
MACRS class for tax purposes. The asset has an acquisition cost of
$4,750,000 and will be sold for $1,375,000 at the end of the
project. If the tax rate is 24 percent, what is the aftertax
salvage value of the asset? Refer to Table 10.7. (Do not
round intermediate calculations and enter your answer in dollars,
not millions of dollars, e.g., 1,234,567.)
What is the:
After-tax salvage value:
computers use for business purposes are assigned to what MACRS property class
computers use for business purposes are assigned to what MACRS
property class
A project requires $178,077 of equipment that is classified as 7-year property. What is the book...
A project requires $178,077 of equipment that is classified as
7-year property. What is the book value of this asset at the end of
year 5 given the following MACRS depreciation allowances, starting
with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and
4.46 percent?
Enter your answer rounded off to two decimal points.
Compute the allowable BOOK depreciation amounts for each year of a machine that costs $55,000 to...
Compute the allowable BOOK depreciation amounts for each year of
a machine that costs $55,000 to purchase, and $4,000 to install
with a 5 year life. Use the DDB method (factor=2) switching to
straight line and salvage=0. What is the allowable depreciation for
year 4?
The answer is not 5098!!!
What is the method used to depreciate for tax purposes a GAAP b MACRS c MACRO...
What is the method used to depreciate for tax purposes
a
GAAP
b
MACRS
c
MACRO
d
Pro Forma
Answer the following questions: How might the MACRS system be beneficial for tax purposes for individuals...
Answer the following questions:
How might the MACRS system be beneficial for tax purposes for
individuals and/or businesses?
Why would businesses utilize straight-line depreciation for
their financial statements and MACRS for their tax accounting?
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