Question

2. A lumber company purchases and installs a wood chipper for $280,000. The chipper is classified...

2. A lumber company purchases and installs a wood chipper for $280,000. The chipper is classified as MACRS 7-year property. The chipper’s useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000. Using straight-line depreciation, what is the approximate first year depreciation?

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Answer #1

using the straight line method the first year depreciation amount is $17140

Depreciation
Wood chipper Year 1 280000 17140
Year 2 262860 17140
Year 3 245720 17140
Year 4 228580 17140
Year 5 211440 17140
Year 6 194300 17140
Year 7 177160 17140
Year 8 160020 17140
Year 9 142880 17140
Year 10 125740 17140
Year 11 108600 17140
Year 12 91460 17140
Year 13 74320 17140
Year 14 57180 17140
Year 15 40040
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