The manager of a plant that manufactures stepper drives knows that MACRS and DDB are both accelerated depreciation methods, but out of curiosity, he wants to determine which one offers faster write-off in the first three years for equipment that has a first cost of $400,000, a 5-year life, and a $50,000 salvage value. Determine which method yields the lower book value and by how much. DDB provides faster write-off for 3 years and difference is $28,800 DDB provides faster write-off for 3 years and difference is $12,600 MACRS provides faster write-off for 3 years and difference is $28,800 MACRS provides faster write-off for 3 years and difference is $12,600
The manager of a plant that manufactures stepper drives knows that MACRS and DDB are both accelerated depreciation methods, but out of curiosity, he wants to determine which one offers faster write-off in the first three years for equipment that has a first cost of $400,000, a 5-year life, and a $50,000 salvage value. Determine which method yields the lower book value and by how much. DDB provides faster write-off for 3 years and difference is $28,800 DDB provides faster write-off for 3 years and difference is $12,600 MACRS provides faster write-off for 3 years and difference is $28,800 MACRS provides faster write-off for 3 years and difference is $12,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![The manager of a plant that manufactures stepper drives knows that MACRS and
DDB are both accelerated depreciation methods, but out of curiosity, he wants to
determine which one offers faster write-off in the first three years for equipment
that has a first cost of $400,000, a 5-year life, and a $50,000 salvage value.
Determine which method yields the lower book value and by how much.
DDB provides faster write-off for 3 years and difference is $28,800
DDB provides faster write-off for 3 years and difference is $12,600
MACRS provides faster write-off for 3 years and difference is $28,800
MACRS provides faster write-off for 3 years and difference is $12,600](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F940a5e04-ce73-4ff6-b735-a01036960128%2Fd9878c5f-6a6e-4909-a034-9cce2183e427%2Fut7ictc_processed.png&w=3840&q=75)
Transcribed Image Text:The manager of a plant that manufactures stepper drives knows that MACRS and
DDB are both accelerated depreciation methods, but out of curiosity, he wants to
determine which one offers faster write-off in the first three years for equipment
that has a first cost of $400,000, a 5-year life, and a $50,000 salvage value.
Determine which method yields the lower book value and by how much.
DDB provides faster write-off for 3 years and difference is $28,800
DDB provides faster write-off for 3 years and difference is $12,600
MACRS provides faster write-off for 3 years and difference is $28,800
MACRS provides faster write-off for 3 years and difference is $12,600
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