Need help with b c d plzzzz!! An asset for drilling was purchased and placed in
ID: 2398973 • Letter: N
Question
Need help with b c d plzzzz!! An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $65,000, and it has an estimated MV of $13,000 at the end of an estimated useful life of 14 years. Compute the depreciation amount in the fourth year and the BV at the end of the fifth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates () a. Using the SL method the depreciation amount in the fourth year is $ 3714. (Round to the nearest dollar.) Using the SL method the BV at the end of the fifth year of life is $ 46428. (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the fourth year is (Round to the nearest dollar)Explanation / Answer
ans b DDB method DDB rate 1/14*200% 0.1429 Year Beg book value B Dep rate Dep exp D Acc dep Ending Bal B-D 1 $65,000 0.1429 $9,285.71 $9,285.71 $55,714.29 2 $55,714.29 0.1429 $7,959.18 $17,244.90 $47,755.10 3 $47,755.10 0.1429 $6,822.16 $24,067.06 $40,932.94 4 $40,932.94 0.1429 $5,847.56 $29,914.62 $35,085.38 5 $35,085.38 0.1429 $5,012 $34,927 $30,073 Depreciation amount fourth year $5,848 BV at end of fifth year $30,073 ans c For GDS class life is 7 years Year Dep base Dep rate Dep exp D Acc dep Ending Bal B-D 1 $65,000 0.1429 $9,288.50 $9,288.50 $55,711.50 2 $65,000.00 0.2449 $15,918.50 $25,207.00 $39,793.00 3 $65,000.00 0.1749 $11,368.50 $36,575.50 $28,424.50 4 $65,000.00 0.1249 $8,118.50 $44,694.00 $20,306.00 5 $65,000.00 0.0893 $5,805 $50,499 $14,501.50 Depreciation amount fourth year $8,119 BV at end of fifth year $14,502 ans d For ADS class life is 14 years ADS using straight line method Year Dep base Dep exp D Acc dep Ending Bal B-D 1 $65,000 $4,642.86 $4,642.86 $60,357.14 2 $65,000.00 $4,642.86 $9,285.71 $55,714.29 3 $65,000.00 $4,642.86 $13,928.57 $51,071.43 4 $65,000.00 $4,642.86 $18,571.43 $46,428.57 5 $65,000.00 $4,642.86 $23,214 $41,785.71 Depreciation amt=65000/14 4642.857 Depreciation amount fourth year $4,643 BV at end of fifth year $41,786