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Use Excel and show formulas please You are getting paid lots of money to determine the...

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Finance

Use Excel and show formulas please You aregetting paid lots of money to determine the best depreciationmethod for a piece of equipment that costs $50,000 and has a zerosalvage value at the end of a 10-year depreciable life. Compute thedepreciation schedules for each of the following methods:

a) straight line depreciation
b) double declining balance depreciation (DDB)
c) 100% bonus depreciation
d) MACRS

Answer & Explanation Solved by verified expert
4.2 Ratings (829 Votes)

a. Straight line = 50,000/10 = 5000 per year for 10 years

b. Double declining = 1/useful life * 2 = 1/10 * 2 = 20%

Year Cost Depreciation rate Depreciation Accumulated depreciation Book Value
1 $ 50,000.00 20% $    10,000.00 $                                10,000.00 $ 40,000.00
2 $ 40,000.00 20% $      8,000.00 $                                18,000.00 $ 32,000.00
3 $ 32,000.00 20% $      6,400.00 $                                24,400.00 $ 25,600.00
4 $ 25,600.00 20% $      5,120.00 $                                29,520.00 $ 20,480.00
5 $ 20,480.00 20% $      4,096.00 $                                33,616.00 $ 16,384.00
6 $ 16,384.00 20% $      3,276.80 $                                36,892.80 $ 13,107.20
7 $ 13,107.20 20% $      2,621.44 $                                39,514.24 $ 10,485.76
8 $ 10,485.76 20% $      2,097.15 $                                41,611.39 $   8,388.61
9 $   8,388.61 20% $      1,677.72 $                                43,289.11 $   6,710.89
10 $   6,710.89 20% $      1,342.18 $                                44,631.29 $   5,368.71

d) Modified Accelerated Cost recovery system-

Percentages for MACRS depreciation taken from the 7-year class personal property table-

Year MACRS
1 14.29% ($50,000) =$7,145
2 24.49%($50,000) =$12,245
3 17.49%($50,000) =$8,745
4 12.49%($50,000) =$6,245
5 8.93%($50,000) =$4,465
6 8.92%($50,000) =$4,460
7 8.93%($50,000) =$4,465
8 4.46%($50,000) =$2,230
9. 0

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Transcribed Image Text

Use Excel and show formulas please You aregetting paid lots of money to determine the best depreciationmethod for a piece of equipment that costs $50,000 and has a zerosalvage value at the end of a 10-year depreciable life. Compute thedepreciation schedules for each of the following methods:a) straight line depreciationb) double declining balance depreciation (DDB)c) 100% bonus depreciationd) MACRS

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