College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 5A, Problem 4SEB
MODIFIED ACCELERATED COST RECOVERY SYSTEM Using the information given in Exercise 5Apx-1B and the rates shown in Figure 5A-4, prepare a
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An asset costs $260,000 and is classified as a ten-year asset. What is the annual depreciation expense for the first three years under the straight-line and the
modified accelerated cost recovery systems of depreciation? Be sure to apply the half-year convention to straight-line depreciation. Use Exhibit 9.4 to answer
the question. Round your answers to the nearest dollar.
Straight-line depreciation:
Year
1
2
3
Accelerated cost recovery system of depreciation:
Year
1
2
Depreciation expense
$
3
Depreciation expense
$
AA
I have included the question and answer I just need to know how to get the answer. Chart attached.
Find the depreciation for the indicated year using MACRS cost-recovery rates for the properties placed in service at midyear. Round dollar amounts to the nearest cent.
Property Class: 3-year
Depreciation year: 3
Cost of property: $97,700
$14,469.37 - answer
Modified Accelerated Cost Recovery System (MACRS) (LO 8.2)
Calculate the following:
Click here to access the various depreciation tables. If required, round your final answers to the nearest dollar. If your answer is zero, enter "0"
b. The second year (2021) of depreciation on a computer that cost $5,000 purchased in May 2020, using the half-year convention and accelerated depreciation considering any bonus depreciation taken.$fill in the blank 41b92bfaafa5018_1
c. The first year of depreciation on a computer costing $2,800 purchased in May 2020, using the half-year convention and straight-line depreciation with no bonus depreciation.$fill in the blank dfbf18f8d052045_1
Chapter 5A Solutions
College Accounting, Chapters 1-27
Ch. 5A - List three depreciation methods used for financial...Ch. 5A - Which depreciation method is used for tax...Ch. 5A - STRAIGHT-LINE DEPRECIATION A small deliver truck...Ch. 5A - SUM-OF-THE-YEARS'-DIGITS DEPRECIATION Using the...Ch. 5A - Prob. 3SEACh. 5A - MODIFIED ACCELERATED COST RECOVERY SYSTEM Using...Ch. 5A - STRAIGHT-LINE DEPRECIATION A computer was...Ch. 5A - Prob. 2SEBCh. 5A - DOUBLE-DECLININGBALANCE DEPRECIATION Using the...Ch. 5A - MODIFIED ACCELERATED COST RECOVERY SYSTEM Using...
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- An asset costs $290,000 and is classified as a ten-year asset. What is the annual depreciation expense for the first three years under the straight-line and the modified accelerated cost recovery systems of depreciation? Be sure to apply the half-year convention to straight-line depreciation. Use Exhibit 9.4 to answer the question. Round your answers to the nearest dollar. Straight-line depreciation: Year Depreciation expense 1 $ 2 $ 3 $ Accelerated cost recovery system of depreciation: Year Depreciation expense 1 $ 2 $ 3 $arrow_forwardAn asset with a first cost of $7,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and the money is worth 8% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes?arrow_forwardI need help with this solutionarrow_forward
- Use the information in Problem A-1 to solve this problem. Assume that the van is five-year property for tax purposes. Required Prepare a schedule of depreciation under MACRS. Round figures to the nearest whole dollar. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 3 depreciation, 3,456arrow_forwardA machine can be purchased for $60,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $3,900 $9,900 $32,000 $14,700 $39,600 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow (60,000) $ (60,000) 1 $ 3,900 2 9,900 3 32,000 4 14,700 5 39,600 Payback periodarrow_forwardI have the answerr below but I need to know HOW to get that answer. Thank you - I think the chart will attach Find the depreciation for the indicated year using MACRS cost-recovery rates for the properties placed in service at midyear. Round dollar amounts to the nearest cent. Property Class: 5-year Depreciation year: 2 Cost of property: $16,800 ($5,376 is the answer but how do I get it?)arrow_forward
- A global positioning system (GPS) receiver is purchased for $3,000. The IRS informs your company that the useful (class) life of the system is seven years. The expected market (salvage) value is $200 at the end of year seven. Solve, a. Use the straight-line method to calculate depreciation in year three. b. Use the 200% declining balance method to calculate the cumulative depreciation through year four.c. Use the MACRS method to calculate the cumulative depreciation through year five. d. What is the book value of the GPS receiver at the end of year four when straight-line depreciation is used?arrow_forwardA machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Compute the machine’s payback period (ignore taxes). (Round the payback period to three decimals.)arrow_forwardModified Accelerated Cost Recovery System (MACRS) (LO 8.2) Calculate the following: Click here to access the various depreciation tables. If required, round your final answers to the nearest dollar. If your answer is zero, enter "0". c. The first year of depreciation on a computer costing $2,800 purchased in May 2020, using the half-year convention and straight-line depreciation with no bonus depreciation.$fill in the blank dfbf18f8d052045_1 d. The third year of depreciation on business furniture costing $10,000 purchased in March 2018, using the half-year convention and accelerated depreciation but no bonus depreciation.$fill in the blank f2779406dfe8021_1arrow_forward
- Question. A calendar-year taxpayer spends $10,000 in December on a file server and peripherals. The server will be used for six years and will then be worth $400. Calculate the depreciation deduction for the 1, 2, and 4 years. Depreciate in a straight-line method.arrow_forwardA firm is evaluating the acquisition of an asset that costs $68,200 and requires $3,930 in installation costs. If the firm depreciates the asset under MACRS, using a five year recovery period, see table attached: Determine the depreciation charge for each year.arrow_forwardQuantum Electronic Services paid P = $40,000 for its networked computer system. Both tax and book depreciation accounts are maintained. The annual tax depreciation rate is based on the previous year’s book value (BV), while the book depreciation rate is based on the original first cost (P). Use the rates listed to plot annual depreciation and book values for each method. Develop the graphs using hand calculations or a spreadsheet, as directed by your instructor.arrow_forward
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