Question

Your company has purchased a large new trucktractor for​ over-the-road use​ (asset class​ 00.26). It has a cost basis of ​$185000. With additional options costing ​$13000​, the cost basis for depreciation purposes is ​$198000. Its MV at the end of four years is estimated as ​$42000. Assume it will be depreciated under the​ GDS: a. What is the cumulative depreciation through the end of year two​? b. What is the MACRS depreciation in the third ​year? c. What is the BV at the end of year two​?. a. The cumulative depreciation through the end of year two is ​$ nothing.

Answer 1

Data’s Given ;

Asset Basis                    $ 1,98,000

Recovery Period            5 Year

Convention                    Half Year Convention (Assumed )

Method Used                 200% Declining Balance Method

Truck Tractor Depreciation Schedule
Year	Basis	%	Depreciation Expenses	Cumilative Depreciation	Book Value	Method Used
1	$ 1,98,000	20.00	$ 39600	$ 39600	$158400	Declining Balane
2	$ 1,98,000	32.00	$ 63360	$ 102960	$ 95040	Declining Balane
3	$ 1,98,000	19.20	$ 38016	$ 140976	$ 57024	Declining Balane
4	$ 1,98,000	11.52	$ 22810	$ 163786	$ 34214	Declining Balane
5	$ 1,98,000	11.52	$ 22810	$ 186595	$ 11405	Declining Balane

Answers to the questions

1. Cumulative depreciation through the end of year two = $ 1,02,960
2. MACRS depreciation in the third ​year                         = $ 38,016
3. Book Value at the end of year two                               ​ = $ 95,040