Question

QUESTION 14

Victory, Inc. purchased some fixed assets four years ago at a cost of $780,000. It no longer needs these assets, so it is going to sell them today at a price of $250,000. 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?

		$149,275
		$134,784
		$126,471
		$142,218
		$137,648

Answer 1

Correct answer is option B, $134784

Calculation of book value at the end of 4^th year(Current book value) as per MACRS Depreciation.

Year	Opening book value	Rate %	Depreciation		Ending Book Value		Method
1	780,000	20	156,000			624,000	DB
2	624,000	32	249,600			374,400	DB
3	374,400	19.2	149,760			224,640	DB
4	224,640	11.52	89,856			134,784	SL
5	134,784	11.52	89,856			44,928	SL

So current bookvalue is=224640-89856=134784