Question

A used drill press costs $60,000, and delivery and installation charges add $5000. The salvage value after 10 years is $10,000. Compute the accumulated depreciation through Year 5 using

NOTE: Use a net tax rate of 22.98% for all problems (disregard the rate given in the problems)

(a) 7-year MACRS depreciation

(b) Straight-line depreciation

Answer 1

Solution:-

(A) 7 - year MACRS depreciation.

Year	Rate (A)	Depreciation Base (B)	Depreciation (A * B)
1	14.29%	65000	9,288.50
2	24.49%	65000	15,918.50
3	17.49%	65000	11,368.50
4	12.49%	65000	8,118.50
5	8.93%	65000	5,804.50

(B). Annual Depreciation = (Total Cost of Press - Salvage Value) / Useful Life
Annual Depreciation = ($65,000 - $10,000) / 10
Annual Depreciation = $5,500

Year	Depreciation Base	Depreciation
1	55000	5500
2	55000	5500
3	55000	5500
4	55000	5500
5	55000	5500