A local private hospital has just purchased a new computerized patient information system with an installed cost of $100,000. For tax purposes, the information system is treated as five-year MACRS property. The system would have a salvage value of about $5,000 at the end of five years.
(i) What is the depreciation allowance for the third year of use?
(ii) What is the depreciation allowance for the fifth year of use?
MACRS depreciation schedule for 5-year property class is as follows. This method does not consider salvage value.
|
Year |
Cost ($) |
Depreciation rate (%) |
Annual Depreciation ($) |
|
(A) |
(B) |
(A) x (B) |
|
|
1 |
1,00,000 |
20 |
20,000 |
|
2 |
1,00,000 |
32 |
32,000 |
|
3 |
1,00,000 |
19.2 |
19,200 |
|
4 |
1,00,000 |
11.52 |
11,520 |
|
5 |
1,00,000 |
11.52 |
11,520 |
(i) Depreciation allowance for third year of use = $19,200
(ii) Depreciation allowance for fifth year of use = $11,520
Get Answers For Free
Most questions answered within 1 hours.