Question

A company recently bought a new robot with a first cost of $240,000, and a depreciation...

A company recently bought a new robot with a first cost of $240,000, and a depreciation lifetime of five years. Using a table for the Modified Accelerated Cost Recovery System, please determine the depreciation amounts and book values for years 1-6. Also, if the robot is sold at the end of year 4 for $100,000, what would be the capital gain, depreciation recapture, or capital loss?

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Answer #1

Dep rate for 5 yrs property are 0.2, 0.32, 0.1920, 0.1152, 0.1152, 0.0576

Depreciation in yr 1 = 0.20 * 240000 = 48000

Book value at end of yr 1 = 240000 - 48000 = 192000

Depreciation in yr 2 = 0.32 * 240000 = 76800

Book value at end of yr 2 = 192000 - 76800 = 115200

Depreciation in yr 3 = 0.192 * 240000 = 46080

Book value at end of yr 3 = 115200 - 46080 = 69120

Depreciation in yr 4 = 0.1152 * 240000 = 27648

Book value at end of yr 4 = 69120 - 27648 = 41472

Depreciation in yr 5 = 0.1152 * 240000 = 27648

Book value at end of yr 5 = 41472 - 27648 = 13824

Depreciation in yr 6 = 0.0576 * 240000 = 13824

Book value at end of yr 6 = 13824 - 13824 = 0

If It is sold for 100000 at the end of yr 4,

capital gain = 100000 - 41472 = 58528

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