Book value Find the book value for the asset shown in the accompanying table, assuming that MACRS depreciation is being used Asset Installed cost Recovery period (years) Elapsed time since purchase Data Table (years) A $983,000 5 3 The remaining book value is $ (Round to the nearest dollar.) (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 6% 9 10 4% 11 Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Print Done
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Year 1: $3,300,000 * 33% = $1,089,000 Year 2: $3,300,000 * 45% = $1,485,000 Year 3: $3,300,000 * 15% = $495,000 Year 4: $3,300,000 * 7% = $231,000 Year 5: $3,300,000 * 12% = $396,000 Show moreā¦
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Depreciation The declining balance method is an accounting method in which the amount of depreciation taken each year is a fixed percentage of the present value of the item. If $y$ is the value of the item in a given year, the depreciation taken is ay for some depreciation rate $a$ with $0<a<1$ and the new value is $(1-a) y$ (a) If the initial value of the item is $y_{0}$, show that the value after $n$ years of depreciation is $(1-a)^{n} y_{0}$ (b) At the end of $T$ years, the item has a salvage value of $s$ dollars. The taxpayer wishes to choose a depreciation rate such that the value of the item after $T$ years will equal the salvage value (see the figure). Show that $a=1-\sqrt{s / y_{0}}$ GRAPH CANT COPY
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