Question

Alphabet, Inc. purchased some fixed assets four years ago at a cost of $172,000. It no longer needs these assets, so it is going to sell them today at a price of $64,000. The assets are classified as 5-year property for MACRS. The MACRS table values .2000, .3200, .1920, .1152, .1152, and .0576 for Years 1 to 6, respectively. What is the current book value of these assets? $21,580.08 $29,721.60 $24,312.63 $33,457.68 $28,742.10

Answer 1

MACRS depreciation required depreciation on the value of asset purchased. Below table shows computation of book value of asset at the end of 4 year.
									i	ii	iii		iv=ii-iii
Year	Depreciation rate	Book value at the beginning	Depreciation		Book value at the end of the year
1	0.2	$172,000	$34,400	=172000*0.2	$137,600.0
2	0.32	$137,600.0	55,040.0	=172000*0.32	$82,560.0
3	0.192	$82,560.0	33,024.0	=172000*0.192	$49,536.0
4	0.1152	$49,536.0	19,814.4	=172000*0.1152	$29,721.6
Hence, correct answer is $29,721.6