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Complete the following table given this information: Note: Do not round intermediate calculations. Cost of machine Residual value Useful life $ 101,800 $ 5,300 5 years

Complete the following table given this information: Note: Do not round intermediate calculations. Cost of machine Residual value Useful life $ 101,800 $ 5,300 5 years

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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### Depreciation Calculation Exercise **Instructions:** Complete the following table given this information: **Note:** *Do not round intermediate calculations.* - **Cost of machine:** $101,800 - **Residual value:** $5,300 - **Useful life:** 5 years **Estimated units machine will produce:** 100,000 | | **Year 1** | **Year 2** | |----------|------------|------------| | **Actual production** | 73,000 | 22,000 | Use the [MACRS](https://en.wikipedia.org/wiki/Modified_Accelerated_Cost_Recovery_System) table. #### Depreciation Methods: 1. **Straight Line** 2. **Units of Production** 3. **Declining Balance** 4. **MACRS (5-year class)** **Depreciation Expense Table:** | **Method** | **Year 1** | **Year 2** | |--------------------------|------------|------------| | **Straight line** | | | | **Units of production** | | | | **Declining balance** | | | | **MACRS (5-year class)** | | | Complete the table by calculating the depreciation expense for each method over the two-year period.
Transcribed Image Text:### Depreciation Calculation Exercise **Instructions:** Complete the following table given this information: **Note:** *Do not round intermediate calculations.* - **Cost of machine:** $101,800 - **Residual value:** $5,300 - **Useful life:** 5 years **Estimated units machine will produce:** 100,000 | | **Year 1** | **Year 2** | |----------|------------|------------| | **Actual production** | 73,000 | 22,000 | Use the [MACRS](https://en.wikipedia.org/wiki/Modified_Accelerated_Cost_Recovery_System) table. #### Depreciation Methods: 1. **Straight Line** 2. **Units of Production** 3. **Declining Balance** 4. **MACRS (5-year class)** **Depreciation Expense Table:** | **Method** | **Year 1** | **Year 2** | |--------------------------|------------|------------| | **Straight line** | | | | **Units of production** | | | | **Declining balance** | | | | **MACRS (5-year class)** | | | Complete the table by calculating the depreciation expense for each method over the two-year period.
**Table 17.5: Annual Recovery for MACRS** This table outlines the annual depreciation recovery percentages for assets based on the Modified Accelerated Cost Recovery System (MACRS). The different asset classes (3-year, 5-year, 7-year, 10-year, 15-year, and 20-year) each have specified percentages over their respective recovery periods. **Columns:** - **Recovery Year:** The year of recovery for the asset's depreciation. - **3-year class (200% D.B.):** Percentages for assets with a 3-year recovery period using the 200% declining balance method. - **5-year class (200% D.B.):** Percentages for assets with a 5-year recovery period using the 200% declining balance method. - **7-year class (200% D.B.):** Percentages for assets with a 7-year recovery period using the 200% declining balance method. - **10-year class (200% D.B.):** Percentages for assets with a 10-year recovery period using the 200% declining balance method. - **15-year class (150% D.B.):** Percentages for assets with a 15-year recovery period using the 150% declining balance method. - **20-year class (150% D.B.):** Percentages for assets with a 20-year recovery period using the 150% declining balance method. **Key Notes:** - Values marked with an asterisk (*) indicate the year when the switch is made to the straight-line method of depreciation. **Details by Recovery Year and Class:** 1. **3-year class (200% D.B.):** Starts at 33% and switches to straight-line at year 3. 2. **5-year class (200% D.B.):** Begins at 20%, switching to straight-line at year 4. 3. **7-year class (200% D.B.):** Starts at 14.28%, switching to straight-line at year 5. 4. **10-year class (200% D.B.):** Begins at 10%, with a switch in year 7. 5. **15-year class (150% D.B.):** Starts at 5%, switching to straight-line at year 7. 6. **20-year class (150% D.B.):** Starts at 3.75%, switching to straight-line at year 9. This table is a critical reference for understanding how
Transcribed Image Text:**Table 17.5: Annual Recovery for MACRS** This table outlines the annual depreciation recovery percentages for assets based on the Modified Accelerated Cost Recovery System (MACRS). The different asset classes (3-year, 5-year, 7-year, 10-year, 15-year, and 20-year) each have specified percentages over their respective recovery periods. **Columns:** - **Recovery Year:** The year of recovery for the asset's depreciation. - **3-year class (200% D.B.):** Percentages for assets with a 3-year recovery period using the 200% declining balance method. - **5-year class (200% D.B.):** Percentages for assets with a 5-year recovery period using the 200% declining balance method. - **7-year class (200% D.B.):** Percentages for assets with a 7-year recovery period using the 200% declining balance method. - **10-year class (200% D.B.):** Percentages for assets with a 10-year recovery period using the 200% declining balance method. - **15-year class (150% D.B.):** Percentages for assets with a 15-year recovery period using the 150% declining balance method. - **20-year class (150% D.B.):** Percentages for assets with a 20-year recovery period using the 150% declining balance method. **Key Notes:** - Values marked with an asterisk (*) indicate the year when the switch is made to the straight-line method of depreciation. **Details by Recovery Year and Class:** 1. **3-year class (200% D.B.):** Starts at 33% and switches to straight-line at year 3. 2. **5-year class (200% D.B.):** Begins at 20%, switching to straight-line at year 4. 3. **7-year class (200% D.B.):** Starts at 14.28%, switching to straight-line at year 5. 4. **10-year class (200% D.B.):** Begins at 10%, with a switch in year 7. 5. **15-year class (150% D.B.):** Starts at 5%, switching to straight-line at year 7. 6. **20-year class (150% D.B.):** Starts at 3.75%, switching to straight-line at year 9. This table is a critical reference for understanding how
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