life (8 years) $20,000. At the van can be sold for $3000. Determine the PW of the depreciation schedule based on 15% interest using: (a) Straight-line depreciation (b) Sum-of-years'-digits depreciation (c) MACRS depreciation

life (8 years) $20,000. At the van can be sold for $3000. Determine the PW of the depreciation schedule based on 15% interest using: (a) Straight-line depreciation (b) Sum-of-years'-digits depreciation (c) MACRS depreciation

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

11-31 A small used delivery van can be purchased for
$20,000. At the end of its useful life (8 years),
the van can be sold for $3000. Determine the PW
of the depreciation schedule based on 15% interest
using:
(a) Straight-line depreciation
(b) Sum-of-years'-digits depreciation
(c) MACRS depreciation
(d) Double declining balance depreciation

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Step 1: Depreciation

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Step 2: Calculation of Present Worth under Straight line depreciation

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Step 3: Calculation of Present Worth under Straight line depreciation

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Step 4: Calculation of Present Worth under MACRS Depreciation

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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