206k views
5 votes
A computer system purchased by Jones Company cost $49,500. Using the MACRS method, calculate the accumulated depreciation at the end of year 3. (Use Table 17-1 and Table 17-2. Round all dollar amounts to the nearest cent.)

User Grantley
by
8.0k points

1 Answer

4 votes

Answer:

To calculate the accumulated depreciation using the MACRS method, you will need to use Table 17-1 and Table 17-2 from your textbook. Here are the steps:

1. Determine the depreciation rate for the computer system based on its class life. According to Table 17-1, the class life for computers is 5 years. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method (which is used in the first year) is 40%. Therefore, the depreciation rate for the computer system in year 1 is 40%.

2. Calculate the depreciation for year 1 using the depreciation rate and the cost of the asset. The depreciation for year 1 is the cost of the asset multiplied by the depreciation rate, which gives us:

Depreciation for year 1 = $49,500 x 40% = $19,800

3. Determine the depreciation rate for year 2. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method in year 2 is 32%. Therefore, the depreciation rate for the computer system in year 2 is 32%.

4. Calculate the depreciation for year 2 using the depreciation rate and the remaining book value of the asset. The remaining book value of the asset after year 1 is the cost of the asset minus the depreciation for year 1, which gives us:

Remaining book value after year 1 = $49,500 - $19,800 = $29,700

Depreciation for year 2 = $29,700 x 32% = $9,504

5. Determine the depreciation rate for year 3. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method in year 3 is 19.2%. Therefore, the depreciation rate for the computer system in year 3 is 19.2%.

6. Calculate the depreciation for year 3 using the depreciation rate and the remaining book value of the asset. The remaining book value of the asset after year 2 is the cost of the asset minus the depreciation for year 1 and year 2, which gives us:

Remaining book value after year 2 = $29,700 - $9,504 = $20,196

Depreciation for year 3 = $20,196 x 19.2% = $3,880.35

User FeatureCreep
by
7.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories