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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:


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