Case summary:
To determine: The annual depreciation using MACR.
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Foundations Of Finance
- Consider a 5-year MACRS property asset with an installed and “made ready for use” cost basis of $100. (Note: The $100 value used here is for illustration purposes in developing the rates. One would not depreciate an asset with a cost basis of only $100.) Develop the MACRS percentage rates (rt) for the asset based on the underlying depreciation methods.arrow_forwardIf an asset has a first cost of $50,000 with a $10,000 estimated salvage valueafter 5 years, calculate the annual SL depreciation and plot the yearly bookvalue.arrow_forwardCompute the amount of interest costs capitalized each year. Compute straight line depreciation. See attacehd image.arrow_forward
- Suppose that you are asked to derive the depreciation rate for a house on rural property. The contributory value of the house is $50,000, the replacement cost is estimated to be $80,000, and its effective age is 10 years. Calculate the annual percentage depreciation for this house. 3% 3.75% 4% 4.75%arrow_forwardA small buisness purchases the laptop computer shown. It will be depreciated over a 4 year period, when its salvage value will be 300. Find a depreciation equation in terms of x years of use.arrow_forwardReferring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?arrow_forward
- An asset has a cost of $100,000. It is to be depreciated using 3-year MACRS depreciation rates. The life of the asset is 3 years. The asset can be sold for $5,000 at the end of its life. Calculate the amount of profit or loss on the sale of the asset. A. Loss of $4,000 B. Loss of $2,410 C. Profit of $5,000 D. Profit of $2,410arrow_forwardAn asset has a first cost of Rs. 48,000 with an estimated life of 20 years. What is the total accumulated depreciation charge during the first 5 years of the asset life if it is depreciated according to DDB Method?arrow_forwardGiven an asset which has an initial cost of $100,000, Useful life of 4 years and a salvage value of 10,000. Use the DDB method to determine the depreciation allowances and the book values for year 1 through 4. You need to see whether switching to the SL method, at any year, is a wise decision.arrow_forward
- Calculate the depreciation in dollar and percentage terms, the yearly depreciation in percentage terms, and the percentage residual value based on the figures provided below. Round each answer to 2 decimals. Type your answers to the calculations in Table 7 of your data file. Remember to show your calculations. The gross capitalized cost of a vehicle is $18,200. At the end of a two-year lease, the residual value is $8,500. What is the depreciation on the vehicle in dollar and percentage terms? What is the yearly depreciation in percentage terms? What is the percentage residual value?arrow_forwardWhat is the depreciation each year for a trailer that cost $10,000 new, has a life of 5 years, and a salvage value of $2,00? Use straight line depreciation. What is ?the book value after 2 yearsarrow_forwardThe cost of an asset is $2,300,000 and has a useful life of 5 years. If the asset can be sold for 20% of the cost. Find the depreciation charge of the asset using the straight line methodarrow_forward
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