5 345 2 hing x (11) Your SID=462122509 Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 4 years? Year MACRS Rate 1 20.0 % 32.0% 19.2% 11.52% 11.52% book value = [?] to the nearest hundre
5 345 2 hing x (11) Your SID=462122509 Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 4 years? Year MACRS Rate 1 20.0 % 32.0% 19.2% 11.52% 11.52% book value = [?] to the nearest hundre
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Book value of $3500 computer after 4 years
![**Title: Depreciation Using Modified Accelerated Cost Recovery System (MACRS)**
**Introduction:**
In asset management and accounting, understanding how to calculate depreciation is essential. The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the United States. This system allows for accelerated depreciation of assets.
**MACRS Rates and Calculation Example:**
Using the MACRS rates from the following table, we can determine the book value of a $3,500 computer after 4 years.
**Table: MACRS Rates**
| Year | MACRS Rate |
|------|------------|
| 1 | 20.0% |
| 2 | 32.0% |
| 3 | 19.2% |
| 4 | 11.52% |
| 5 | 11.52% |
**Exercise:**
Determine the book value of a $3,500 computer after 4 years using the given MACRS rates.
**Solution:**
Let's calculate the depreciation for each year and subtract it from the initial cost:
1. **Year 1:**
- Depreciation: $3,500 * 20.0% = $700
- Book Value End of Year 1: $3,500 - $700 = $2,800
2. **Year 2:**
- Depreciation: $3,500 * 32.0% = $1,120
- Book Value End of Year 2: $2,800 - $1,120 = $1,680
3. **Year 3:**
- Depreciation: $3,500 * 19.2% = $672
- Book Value End of Year 3: $1,680 - $672 = $1,008
4. **Year 4:**
- Depreciation: $3,500 * 11.52% = $403.20
- Book Value End of Year 4: $1,008 - $403.20 = $604.80
After rounding to the nearest hundredth, the book value of the computer after 4 years is **$604.80**.
**Interactive Component:**
Enter your calculated book value below:
**Book value = $[___]**
After entering your value, press "Enter" to check your answer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F65fa9135-584b-4c8f-9a77-fa5b02ab5c57%2F732e173c-7f5e-4b15-82b2-242bb174bac3%2Fjzzw86_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Title: Depreciation Using Modified Accelerated Cost Recovery System (MACRS)**
**Introduction:**
In asset management and accounting, understanding how to calculate depreciation is essential. The Modified Accelerated Cost Recovery System (MACRS) is the current tax depreciation system in the United States. This system allows for accelerated depreciation of assets.
**MACRS Rates and Calculation Example:**
Using the MACRS rates from the following table, we can determine the book value of a $3,500 computer after 4 years.
**Table: MACRS Rates**
| Year | MACRS Rate |
|------|------------|
| 1 | 20.0% |
| 2 | 32.0% |
| 3 | 19.2% |
| 4 | 11.52% |
| 5 | 11.52% |
**Exercise:**
Determine the book value of a $3,500 computer after 4 years using the given MACRS rates.
**Solution:**
Let's calculate the depreciation for each year and subtract it from the initial cost:
1. **Year 1:**
- Depreciation: $3,500 * 20.0% = $700
- Book Value End of Year 1: $3,500 - $700 = $2,800
2. **Year 2:**
- Depreciation: $3,500 * 32.0% = $1,120
- Book Value End of Year 2: $2,800 - $1,120 = $1,680
3. **Year 3:**
- Depreciation: $3,500 * 19.2% = $672
- Book Value End of Year 3: $1,680 - $672 = $1,008
4. **Year 4:**
- Depreciation: $3,500 * 11.52% = $403.20
- Book Value End of Year 4: $1,008 - $403.20 = $604.80
After rounding to the nearest hundredth, the book value of the computer after 4 years is **$604.80**.
**Interactive Component:**
Enter your calculated book value below:
**Book value = $[___]**
After entering your value, press "Enter" to check your answer
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