Answer Happy

Your company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $174,000. With additional options costing $13,000, the cost basis for depreciation purposes is $187,000. Its MV at the end of seven years is estimated as $44,000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year four? b. What is the MACRS depreciation in the fourth year? c. What is the BV at the end of year one?
fo Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 MACRS Class Lives and Recovery Periods Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 بن 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 5 NNW 7 7 7 10 5 5 HONG NG 7 15 7 5 7 10 20 20 7 10 5 5 9 5 6 4 10 10 14 16 6 9 10 9.5 HONONDERSO 14 20 12 6 12 10 18 28 35 10
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) 3-yeara 0.3333 0.4445 0.1481 0.0741 5-yeara 7-yeara 0.2000 0.1429 0.3200 0.2449 0.1920 0.1749 0.1152 0.1249 0.1152 0.0893 0.0576 0.0892 0.0893 0.0446 10-yeara 0.1000 0.1800 0.1440 0.1152 0.0922 0.0737 0.0655 0.0655 0.0656 0.0655 0.0328 15-yearb 0.0500 0.0950 0.0855 0.0770 0.0693 0.0623 0.0590 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-yearb 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 *These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000. "These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places.