Hoppy Hops, Inc., purchased hop-harvesting machinery for $150,000 four years ago. Owing to a change in the method of harvesting, the machine was recently sold for $37,500. Determine the MACRS deprecation schedule for the machinery for the 4 years of ownership. Assume a 5-year property class. What is the recaptured depreciation or loss on the sale of the machinery?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Hoppy Hops, Inc., purchased hop-harvesting machinery for $150,000 four years ago. Owing to a change in the method of harvesting, the machine was recently sold for $37,500. Determine the MACRS deprecation schedule for the machinery for the 4 years of ownership. Assume a 5-year property class. What is the recaptured
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