Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *Switchover to straight-line depreciation. Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.) Tax depreciation for 2020 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2021 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2022 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2023 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2024 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2025 $enter a dollar amount rounded to 0 decimal places

Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property Recovery Year 3-year (200% DB) 5-year (200% DB) 7-year (200% DB) 10-year (200% DB) 15-year (150% DB) 20-year (150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462* 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *Switchover to straight-line depreciation. Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.) Tax depreciation for 2020 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2021 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2022 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2023 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2024 $enter a dollar amount rounded to 0 decimal places Tax depreciation for 2025 $enter a dollar amount rounded to 0 decimal places

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

Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years.

MACRS Depreciation Rates by Class of Property
Recovery Year		3-year (200% DB)	5-year (200% DB)	7-year (200% DB)	10-year (200% DB)	15-year (150% DB)	20-year (150% DB)
1		33.33	20.00	14.29	10.00	5.00	3.750
2		44.45	32.00	24.29	18.00	9.50	7.219
3		14.81*	19.20	17.49	14.40	8.55	6.677
4		7.41	11.52*	12.49	11.52	7.70	6.177
5			11.52	8.93*	9.22	6.93	5.713
6			5.76	8.92	7.37	6.23	5.285
7				8.93	6.55*	5.90*	4.888
8				4.46	6.55	5.90	4.522
9					6.56	5.91	4.462*
10					6.55	5.90	4.461
11					3.28	5.91	4.462
12						5.90	4.461
13						5.91	4.462
14						5.90	4.461
15						5.91	4.462
16						2.95	4.461
17							4.462
18							4.461
19							4.462
20							4.461
21							2.231

	*Switchover to straight-line depreciation.

Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.)

Tax depreciation for 2020		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2021		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2022		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2023		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2024		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2025		$enter a dollar amount rounded to 0 decimal places

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Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and tear, obsolescence of time and other reasons.

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

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