An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is ?$50,000?, and it has an estimated MV of ?$14,000 at the end of an estimated useful life of 13 years. Compute the depreciation amount in the fourth year and the BV at the end of the fifth year of life by each of these?methods:
a. The SL method.
b. The 200?% DB method with switchover to SL.
c. The GDS.
d. The ADS.
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $50,000, and it has an estimated MV of $14,000 at the end of an estimated useful life of 13 years. Compute the depreciation amount in the fourth year and the BV at the end of the fifth year of life by each of these methods: a. The SL method. b. The 200% DB method with switchover to SL. c. The GDS. d. The ADS. Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (*). a. Using the SL method the depreciation amount in the fourth year is $ . (Round to the nearest dollar.) Using the SL method the BV at the end of the fifth year of life is $ . (Round to the nearest dollar.) b. Using the 200% DB method the depreciation amount in the fourth year is $ . (Round to the nearest dollar.) Using the 200% DB method the BV at the end of the fifth year of life is $ . (Round to the nearest dollar.) c. Using the GDS the depreciation amount in the fourth year is $ . (Round to the nearest dollar.) Using the GDS the BV at the end of the fifth year of life is $ . (Round to the nearest dollar.) d. Using the ADS the depreciation amount in the fourth year is $ . (Round to the nearest dollar.) Using the ADS the BV at the end of the fifth year of life is $ ]. (Round to the nearest dollar.)i More Info X MACRS Class Lives and Recovery Periods Recovery Periods Asset Class Descriptions of Assets Class Life GDS ADS 00.11 Office furniture and equipment 10 10 00.12 Information systems, including computers 00.22 Automobiles, taxis 00.23 Buses 00.241 Light general purpose trucks 00.242 Heavy general purpose trucks 00.26 Tractor units for use over the road 01.1 Agriculture 10.0 Mining 13.2 Production of petroleum and natural gas 13.3 Petroleum refining 15.0 Construction 22.3 Manufacture of carpets 24.4 Manufacture of wood products and furniture 10 28.0 Manufacture of chemicals and allied products 9.5 30.1 Manufacture of rubber products 14 32.2 Manufacture of cement 20 34.0 Manufacture of fabricated metal products 12 12 36.0 Manufacture of electronic components, products, and systems 6 5 6 37.11 Manufacture of motor vehicles 12 7 12 37.2 Manufacture of aerospace products 10 7 10 48.12 Telephone central office equipment 18 10 18 49.13 Electric utility steam production plant 28 20 28 49.21 Gas utility distribution facilities 35 20 35 79.0 Recreation 10 10 Print Done1 More Info X GDS Recovery Rates (r ) for the Six Personal Property Classes Recovery Period (and Property Class) Year 3-yeara 5-year 7-yeara 10-year 15-yearb 20-year 0.3333 0.2000 0. 1429 0.1000 0.0500 0.0375 0.4445 0.3200 0.2449 0. 1800 0.0950 0.0722 0. 1481 0. 1920 0.1749 0.1440 0.0855 0.0668 0.0741 0.1152 0.1249 0. 1152 0.0770 0.0618 0. 1152 0.0893 0.0922 0.0693 0.0571 0.0576 0.0892 0.0737 0.0623 0.0528 0.0893 0.0655 0.0590 0.0489 0.0446 0.0655 0.0590 0.0452 0.0656 0.0591 0.0447 0.0655 0.0590 0.0447 0.0328 0.0591 0.0446 0.0590 0.0446 0.0591 0.0446 14 0.0590 0.0446 0.0591 0.0446 16 0.0295 0.0446 17 0.0446 18 0.0446 19 0.0446 20 0.0446 21 0.0223 "These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000. 'These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. Print Done
