You have computer server system which cost $35,000. 1. Create a straight line de

Question

You have computer server system which cost $35,000.

1. Create a straight line depreciation table for this asset. Assume it has a 5 year life and $5000 salvage value at that time.

2. Create a double-declining balance table for this asset. Assume it has a 5 year life and $5000 salvage value at that time.

3. What is the MACRS class life for this asset?

Show the depreciation for each year for parts A. and B. in the table.

3. MACRS class life?

Year Straight Line Depreciation Straight Line Book Value Double Declining Balance Depr D-D-Balance Book Value

Explanation / Answer

Ans: 1 & 2:

3. MACRS class life for this asset is 5 years

Year Straight Line Depreciation Straight Line Book Value Double Declining Balance Depr D-D-Balance Book Value 1 $6000 $29000 $14000 $21000 2 $6000 $23000 $8400 $12600 3 $6000 $17000 $5040 $7560 4 $6000 $11000 $2560 $5000 5 $6000 $5000

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