Question

The Jones Company has just completed the third year of a​ five-year MACRS recovery period for a piece of equipment it originally purchased for $ 299 comma 000. a. What is the book value of the​ equipment?

Answer 1

Answer: $86,112

Step-by-step explanation:

The MACRS depreciation rate for recovery period of 5 years is attached to the table below.

In the first year, there was a depreciation of;

= 299,000 * 20%

= $59,800

In the second year;

= 299,000 * 32%

= $95,680

In the third year;

= 299,000 * 19.20%

= $57,408

The Accumulated Depreciation in Year 3;

= 59,800 + 95,680 + 57,408

= $212,888

Book Value in third year;

= 299,000 - 212,888

= $86,112