Question

Alphabet, Inc. purchased some fixed assets four years ago at a cost of $172,000. It no...

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

Homework Answers

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
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