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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