Question

Please show all steps:

What is the book value at the end of year 3 of an asset purchased for $50,000, depreciated over 5 years and a salvage value of $10,000 using: (Chapter 11)

-Straight Line Depreciation

-MACRS (use 5 year depreciation schedule)

Answer 1

	Book value	50000
	Years	5
	Slavage value	10000
	SLM(Straight line method)		=(book value-salvage value)/number of years
			Straight line method	8000
	SLM(Straight line method)
Years	Book value	Depr. At SLM basis	Closing value
1	50000	8000.00	42000.00
2	50000	8000.00	34000.00
3	50000	8000.00	26000.00
4	50000	8000.00	18000.00
5	50000	8000.00	10000.00
	Salvage value of asset	10000.00
	MACRS(Modified Accelerated Cost Recovery Systems)
Years	Book value	Depr. At 5 years MACRS	Depreciation	Closing value
1	50000	20%	10000	40000
2	50000	32%	16000	24000
3	50000	19.20%	9600	14400
4	50000	11.52%	5760	8640
5	50000	11.52%	5760	2880
	Salvage value of asset	5.76%	2880