Jodi Jackson is the general manager of a student-operated public restaurant in a hospitality management program at a large state university. She used her old dish machine for as long as she could, but it is finally beyond repair! So, she has purchased a new dish machine for $21,400 that she will fully depreciate with no salvage value

(according to state laws). According to the MACRS property class table, the dish machine has a 7-year class life.

Help Jodi complete her depreciation schedule for the dish machine using MACRS deprecation.

"|

7-Year Property %

14.29%

24.49%

17.49%

i,Se

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eer ae oie oe adiasne!

stad Toe Depreciation on Dish Machine 100.00%

a. Since the dish machine has a 7-year class life, why is it depreciated 8 years?

b. Why are the depreciation percentages more during the first 4 years than the last 4 years?

c. If Jodi was going to sell the dish machine for a salvage value instead of depreciating it fully, how would this change her depreciation calculations?

d. If Jodi sold the dish machine before it was fully depreciated for less than her purchase price, would this represent a capital gain or a capital loss? How would this affect her taxes?