Solutions to Homework _7

Solutions to Homework _7 - Solutions to HW#7 7-11 IE 1040...

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Solutions to HW #7 IE 1040 Fall, 2005 7-11 Basis = \$60,000 and SV N = \$12,000. Find d 3 and BV 5 . (a) d 3   = d k   B SV N N - = - \$60, \$12, 000 000 14  = \$3,428.57 BV 5 = \$60,000 - (5)(\$3,428.57) = \$42,857.15 (b) (1) (2) (3) (4) Depreciation Method Year, k Beginning of Year BV a 200% Declining Balance Method b Straight-Line Method c Depreciation Amount Selected d 1 \$ 60,000.00 \$8,571.43 \$3,428.57 \$8,571.43 2 51,428.57 7,346.94 3,032.97 7,346.94 3 44,081.63 6,297.38 2,673.47 6,297.38 4 37,784.25 5,397.75 2,344.02 5,397.75 5 32,386.50 4,626.64 2,038.65 4,626.64 a Column 1 for year k - column 4 for year k = the entry in column 1 for year k+1 b Column 1 x (2 / 14) c Column 1 minus estimated SV N divided by remaining years from the beginning of the current year through the fourteenth year. d Select the larger amount of column 2 or column 3. From the above table, d 3 = \$6,297.38 and BV 5 = \$32,386.50 - \$4,626.64 = \$27,759.86 (c) From Table 7-2, the GDS recovery period is 7 years. d 3 = \$60,000 (0.1749) = \$10,494 BV 5 = \$60,000 - \$60,000 (0.1429 + 0.2449 + 0.1749 + 0.1249 + 0.0893) = \$13,386 (d) From Table 7-2, the ADS recovery period is 14 years. d

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Solutions to Homework _7 - Solutions to HW#7 7-11 IE 1040...

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