Question

Brock Florist Company buys a new delivery truck for $29,000, a light truck. Using MACRS tables for a five-year asset, calculate the book value at the end of the year 4.

Answer 1

Cost of Delivery Truck = $29,000

Depreciation Expense, Year 1 = 20.00% * $29,000
Depreciation Expense, Year 1 = $5,800.00

Depreciation Expense, Year 2 = 32.00% * $29,000
Depreciation Expense, Year 2 = $9,280.00

Depreciation Expense, Year 3 = 19.20% * $29,000
Depreciation Expense, Year 3 = $5,568.00

Depreciation Expense, Year 4 = 11.52% * $29,000
Depreciation Expense, Year 4 = $3,340.80

Accumulated Depreciation = $5,800.00 + $9,280.00 + $5,568.00 + $3,340.80
Accumulated Depreciation = $23,988.80

Book Value at the end of Year 4 = Cost of Delivery Truck - Accumulated Depreciation
Book Value at the end of Year 4 = $29,000 - $23,988.80
Book Value at the end of Year 4 = $5,011.20