Question

Year | Three-Year | Five-Year | Seven-Year |

1 | 33.33% | 20.00% | 14.29% |

2 | 44.45 | 32.00 | 24.49 |

3 | 14.81 | 19.20 | 17.49 |

4 | 7.41 | 11.52 | 12.49 |

5 | 11.52 | 8.93 | |

6 | 5.76 | 8.92 | |

7 | 8.93 | ||

8 | 4.46 |

A piece of newly purchased industrial equipment costs $710053 and is classified as seven-year property under MACRS. What is the book value at the beginning of year 8? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.) Modified ACRS Depreciation Allowances (Table 10.7)

Answer #1

The book value at the beginning of year 8 is the same as the equipment's book value at the end of year 7. The book value in this context is the same as the recorded depreciated value at the end of Year 7. The equipment follows a 7-year MACRS depreciation method.The same would be calculated as given below:

TIME (in Years) |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |

Initial Cost | 710053 | ||||||||

Annual Depreciation | 101466.57 | 173891.98 | 124188.27 | 88685.62 | 63407.73 | 63336.73 | 63407.74 | 31668.36 | |

Depreciated Value | 608586.43 | 434694.45 | 310506.18 | 221820.56 | 158412.83 | 95076.1 | 31668.36 |
0 |

**Hence, the book value (depreciated value) of the
equipment at the beginning of Year 8 (end of Year 7) is $
31668.36.**

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Modified ACRS
Depreciation Allowances (Table 10.7)
Year
Three-Year
Five-Year
Seven-Year
1
33.33%
20.00%
14.29%
2
44.45
32.00
24.49
3
14.81
19.20
17.49
4
7.41
11.52
12.49
5
11.52
8.93
6
5.76
8.92
7
8.93
8
4.46
Please give a detailed step by step description so that I can
follow along with the solution
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