An Asset with a First Cost of $100,000 Is Depreciated

question 5

Essay

An asset with a first cost of $100,000 is depreciated over 5-year period. It is expected to have a $5,000 salvage
value at the end of 5 years.
(a) Using the straight-line method, what is the book value at the end of year 2?
(b) With the double declining balance (200% DB) schedule, what is the depreciation charge for year 5?
(c) In (b) above, suppose the estimated salvage value at the end of year 5 is $10,000, instead of $5,000. If the
200% DB method is used, what is the allowed depreciation charge for year 5?
(d) In (c) above, assume that the asset is classified as a 5-year MACRS property for tax depreciation purpose.
What is the book value of the asset at the end of year 3?

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Definitions:

Heterozygous

Inheriting from parents different forms of a gene for a given trait.

Monozygous

Pertains to monozygotic twins, twins resulting from a single fertilized egg that splits, resulting in two genetically identical individuals.

Dizygotic

Refers to twins that are fraternal, meaning they developed from two different eggs fertilized by two different sperm, resulting in genetically distinct siblings.

Monozygotic

Relating to twins who have developed from a single fertilized ovum, making them genetically identical.