Unformatted text preview: turer of aerospace products purchased three flexible assembly cells for $600,000 each.
Delivery and insurance charges were $40,000, and installation of the cells cost another $50,000.
(Hint: For Part b, please refers to Table 7.2 MACRS Class Lives and Recovery Periods. For Part
c, use 7 years GDS Recovery Rates)
a. Determine the cost basis of the three cells.
Three flexible assembly cells = 3($600,000) = $1,800,000
Delivery and insurance charges = $40,000
Installation of the cells = $50,000 b. What is the class life of the cells?
From table 7-2 on page 298, you can find that the class life for Manufacture of aerospace
products (asset class = 37.2) is 10 years.
c. What is the MACRS depreciation in year five?
From table 7-2 on page 298, the GDS recovery period is seven years. GDS recovery rates
(rk) can be found on page 300. From table 7-3, GDS recover rates, 0.0893, can be
obtained. d. If the cells are sold to another company for $120,000 each at the end of year six, how
much is the recaptured depreciation?
There’s an early...
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- Fall '08
- Depreciation, retail price, insurance charges, Samantha Corporation, Parzynski Systems