Can you please show all the calculations, and steps? A corporation will buy a se
ID: 2770357 • Letter: C
Question
Can you please show all the calculations, and steps? A corporation will buy a set of three heavy duty trucks for 100,000 dollars. The company will use the trucks for 10 years and expect the set of three to have a salvage value of 9000 dollars. (a) Using the DDB method of depreciation compute the Book Value and yearly depreciation for the set of trucks for the years 3 and 8. (b) Using the mandated MACRS tables compute the Book Value and yearly depreciation for the set of trucks for the years 2 and 9. (c) Using the DB method such that the book value equals the salvage value after 10 years calculate the Book value and yearly depreciation for the years 4 and 7. Show all intermediate steps including as appropriate: rate used, property class and any other significant intermediate results.Explanation / Answer
Heavyb Zduty Truck MACRS Asset Class: 00.242. Class life 6 years Recovery Period 5 years Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 MACRS Rate DD balnce half year convention: 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% Details Amt $ Cost of Trucks 100,000 Salvage 9,000 Depreciable value 91,000 Useful life in years 10 SL depreciation rate 10% DDB rate 20% a DDB Depreciation beginning Book Value Dep rate Depr Amt Accumulated Depreciation Remaining Book Value Year 1 100,000 20% 20,000 20,000 80,000 Year 2 80,000 20% 16,000 16,000 64,000 Year 3 64,000 20% 12,800 12,800 51,200 Year 4 51,200 20% 10,240 10,240 40,960 Year 5 40,960 20% 8,192 8,192 32,768 Year 6 32,768 20% 6,554 6,554 26,214 Year 7 26,214 20% 5,243 5,243 20,972 Year 8 20,972 20% 4,194 4,194 16,777 Year 9 16,777 20% 3,355 3,355 13,422 Year 10 13,422 20% 4,421 4,421 9,000 So depreciation DDB year 3-8 DDB Depreciation beginning Book Value Dep rate Depr Amt Accumulated Depreciation Remaining Book Value Year 3 64,000 20.0% 12,800 12,800 51,200 Year 4 51,200 20.0% 10,240 10,240 40,960 Year 5 40,960 20.0% 8,192 8,192 32,768 Year 6 32,768 20.0% 6,554 6,554 26,214 Year 7 26,214 20.0% 5,243 5,243 20,972 Year 8 20,972 20.0% 4,194 4,194 16,777 b MACRS depreciation Year beginning Book Value Dep rate Depr Amt based on Cost Accumulated Depreciation Remaining Book Value Year 1 100,000 20.00% 20,000 20,000 80,000 Year 2 80,000 32.00% 32,000 32,000 48,000 Year 3 48,000 19.20% 19,200 19,200 28,800 Year 4 28,800 11.52% 11,520 11,520 17,280 Year 5 17,280 11.52% 11,520 11,520 5,760 Year 6 5,760 5.76% 5,760 5,760 - Year 7 - - - - Year 8 - - - - Year 9 - - - - Year 10 - - - - Details for Year 2 & 9 Year beginning Book Value Dep rate Depr Amt based on Cost Accumulated Depreciation Remaining Book Value Year 2 80,000 32.00% 32,000 32,000 48,000 Year 9 - - - - - c DDB Depreciation beginning Book Value Dep rate Depr Amt Accumulated Depreciation Remaining Book Value Year 1 100,000 21.4% 21,400 21,400 78,600 Year 2 78,600 21.4% 16,820 16,820 61,780 Year 3 61,780 21.4% 13,221 13,221 48,559 Year 4 48,559 21.4% 10,392 10,392 38,167 Year 5 38,167 21.4% 8,168 8,168 29,999 Year 6 29,999 21.4% 6,420 6,420 23,580 Year 7 23,580 21.4% 5,046 5,046 18,534 Year 8 18,534 21.4% 3,966 3,966 14,567 Year 9 14,567 21.4% 3,117 3,117 11,450 Year 10 11,450 21.4% 2,450 2,450 9,000 Using DB rate of 21.4% , the book value becomes salvage value after 10 Years Depreciation details for year 4 & 7 DDB Depreciation beginning Book Value Dep rate Depr Amt Accumulated Depreciation Remaining Book Value Year 2 78,600 21.40% 16,820 16,820 61,780 Year 7 23,580 21.40% 5,046 5,046 18,534