Question

A package delivery truck with a five-year MACRS class purchased at $80,000. It was purchased and placed in service on January 5, 2020. The applicable salvage values would be $40,000 in 2021, $10,000 2023, and $2,000 in 2027.) Compute the gain or loss amounts when the asset is disposed of in:

2021 ________
2023 ________
2027 ________

Answer 1

gain if sold at the end of 2021 = $1,600

loss if sold at the end of 2023 = -$3,824

gain if sold at the end of 2027 = $2,000

Step-by-step explanation:

MACRS half year convention depreciation rate for 5 year recovery period

year depreciation % depreciation expense book value

0 $80,000

2020 20% $16,000 $64,000

2021 32% $25,600 $38,400

2022 19.20% $15,360 $23,040

2023 11.52% $9,216 $13,824

2024 11.52% $9,216 $4,608

2025 5.76% $4,608 $0

gain if sold at the end of 2021 = $40,000 - $38,400 = $1,600

loss if sold at the end of 2023 = $10,000 - $13,824 = -$3,824

gain if sold at the end of 2027 = $2,000