Question

A high-precision programmable router for shaping furniture components is purchased by Henredon for $180,000. It is expected to last 12 years. Calculate the depreciation deduction and book value for each year using MACRS-GDS allowances. What is the MACRS-GDS property class?

Answer 1

MACRS-GDS is a way to calculate depreciation.

Step-by-step explanation:

Depreciation may be defined as the reduction or the decrease in the price or its value of an asset in passing years. There are several methods of finding out the depreciation value like the straight line method, double declining, etc, MACRS-GDS, etc.

MACRS-GDS is one of the method to calculate the value of depreciation.

According to the question,

The depreciation of a shaping furniture that cost $ 180,000 that can last ofr 12 years can be found out :

0 0 180000

For the end of 1st year, 46440 133560

For the end of 2nd year, 34458 99102

For the end of 3rd year, 25568 73533

For the end of 4th year, 18972 54562

For the end of 5th year, 14077 40485

For the end of 6th year, 10445 30040

For the end of 7th year, 7750 22289

For the end of 8th year, 5751 16539

For the end of 9th year, 4267 12272

For the end of 10th year, 3166 9106

For the end of 11th year, 2349 6756

For the end of 12th year, 1743 5013

The MACRS-GDS property class should be 7 years as the ADS is greater than ten years but it is less sixteen years.