Exercise 11-25 Sheridan Enterprises purchased a delivery truck on January 1, 2017, at a cost...
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Exercise 11-25 Sheridan Enterprises purchased a delivery truck on January 1, 2017, at a cost of $33,750. The truck has a useful life of 7 years with an estimated salvage value of $7,500. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2017 and 2018 the company has revenues of $250,000 and operating expenses (exdluding depreciation) of $162,500 MACRS Depreciation Rates by Class of Property 7-year 00% 15-year Recovery Year 3-year 5-year 200% DB 10-year DB) (200% DB) ( 150% DB) ( 150% DB) 200% DB 33.33 44.45 14.81 20.00 14.29 24.29 17.49 12.49 8.93 10.00 18.00 14.40 11.52 5.00 7.219 6.677 8.55 11.52 11.52 5.76 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4,461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 7.37 6.55 6.55 6.56 6.55 3.28 3.93 4.46 10 12 13 14 15 16 17 18 20 Switchover to straight-line deprecation Compute income before income taxes for 2017 and 2018 2017 2018 Income before income taxes
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