Answer Happy

An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $50,000, and it has an estimated MV of $11,000 at the end of an estimated useful life of 12 years. Compute the depreciation amount in the second year and the BV at the end of the third year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. Using the SL method the depreciation amount in the second year is $ (Round to the nearest dollar.)

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 BN59 14 15 16 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 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 7-yeara 0.1429 0.2449 0.1749 0.1249 0.0893 0.0892 0.0893 0.0446 10-yeara 15-yearb 0.1000 0.0500 0.1800 0.0950 0.1440 0.0855 0.1152 0.0770 0.0922 0.0693 0.0623 0.0590 0.0590 0.0591 0.0590 0.0737 0.0655 0.0655 0.0656 0.0655 0.0328 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 00110

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 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 Class Life 10 6 3 9 4 46 4 10 10 14 16 6 9 10 9.5 14 20 Recovery Periods GDS ADS 7 01 5 5 5 5 5 3 7 7 7 10 5 5 7 5 75 15 10 5 5 9 5 6 4 10 10 14 16 6 9 10 9.5 14 20

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 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 6 4 10 10 14 16 6 9 10 9.5 122 14 20 6 12 10 18 28 35 10 64 5377 To 7 10 5 5 7 5 7 15 7 5 7 7 10 20 20 7 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10