Recovery period (years) Elapsed time since purchase (years) talled cost 987,000 5 2 walue is $ (Round to the nearest dollar.) on located on the top-right corner of the data table below in order to copy its contents into preciation Percentages by Recovery Year Using MACRS for roperty Classes Percentage by recovery year* 5 years year 7 years 10 years 10% 3 years 33% 20% 14% 45% 32% 25% 18% 15% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 5% 9% 8% 9% 7% 4% 6% 6% 6% 4% 100% 100% 100% 100% ntages have been rounded to the nearest whole percent to simplify calculations while ism To calculate the actual depreciation for tay purnoses be sure to apply the actual
Recovery period (years) Elapsed time since purchase (years) talled cost 987,000 5 2 walue is $ (Round to the nearest dollar.) on located on the top-right corner of the data table below in order to copy its contents into preciation Percentages by Recovery Year Using MACRS for roperty Classes Percentage by recovery year* 5 years year 7 years 10 years 10% 3 years 33% 20% 14% 45% 32% 25% 18% 15% 19% 18% 14% 7% 12% 12% 12% 12% 9% 9% 5% 9% 8% 9% 7% 4% 6% 6% 6% 4% 100% 100% 100% 100% ntages have been rounded to the nearest whole percent to simplify calculations while ism To calculate the actual depreciation for tay purnoses be sure to apply the actual
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 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.
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Question
Transcribed Image Text:Book value Find the book value for the asset shown in the accompanying table, assuming that MACRS depreciation is being
used E
Recovery
period
(years)
Elapsed time
since purchase
(years)
Asset
Installed cost
A
$987,000
2
The remaining book value is $ . (Round to the nearest dollar.)
Data Table
(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a
spreadsheet.)
Rounded Depreciation Percentages by Recovery Year Using MACRS for
First Four Property Classes
Percentage by recovery year*
5 years
Recovery year
3 years
7 years
10 years
1
33%
20%
14%
10%
45%
32%
25%
18%
15%
19%
18%
14%
7%
12%
12%
12%
12%
9%
9%
5%
9%
8%
9%
7%
4%
6%
6%
10
6%
11
4%
Totals
100%
100%
100%
100%
*These percentages have been rounded to the nearest whole percent to simplify calculations while
retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual
unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year
convention.
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