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AlexFokin [52]
3 years ago
15

Western steer purchased some three-year macrs property three years ago. what is the current book value of this equipment if the

original cost was $94,250? the macrs allowance percentages are as follows, commencing with year 1: 33.33, 44.45, 14.81, and 7.41 percent.
Business
1 answer:
Anestetic [448]3 years ago
6 0

Answer: The current book value of an equipment purchased three years ago is $6983.925 .

There are two ways to solve this question.

<h3>Method 1</h3>

In this method, we compute the depreciation for each of the three years and deduct the total depreciation calculated from the purchase value of the equipment to arrive at the book value of the equipment.

Equipment Value: $94,250

Year          MARCS Depreciation Rate                    Depreciation

1                        0.3333                           94250*0.3333 = 31413.525  

2                       0.4445                           94250*0.4445 = 41894.125&#10;

3                       0.1481                            <u> 94250*0.1481 = 13958.425&#10;</u>

Total                                                                           87266.075

Value at the end of year 3 is $94,250 - 87266.075  = 6983.925

<h3>Method 2</h3>

In this method, we add up the depreciation rates and deduct from 1. We then find the product of this number and the cost of the equipment to arrive at the current book value.

Current Book Value = [1 - (0.3333+0.4445+0.1481)]*94250

Current Book Value = [1 - (0.9259)]*94250

Current Book Value = [0.0741]*94250

\mathbf{Current Book Value = 6983.925&#10;}

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