An asset was purchased for $70,000, has a salvage value of $10,000, and has a useful life of 10 years. If the asset is placed in service on May 1 {the companys fiscal year runs from January 1 to December 31}, what is its straight line depreciation charge for the first year of service? What is the depreciation charge for year five of its useful life using MACRS depreciation and given it is a GDS 10-year property? (see attached schedule)

MACRS Depreciation for Personal Property: Half-year Convention

	Applicable Percentage for GDS Property Class
Recovery Year	3-year Property	5-year Property	7-year Property	10-year Property	15-year Property	20-year Property
1 2 3	33.33 44.45 14.81	20.00 32.00 19.20	14.29 24.49 17.49	10.00 18.00 14.40	5.00 9.50 8.55	3.750 7.219 6.677
4 5 6	7.41	11.52 11.52 5.76	12.49 8.93 8.92	11.52 9.22 7.37	7.70 6.93 6.23	6.177 5.713 5.285
7 8 9			8.93 4.46	6.55 6.55 6.56	5.90 5.90 5.91	4.888 4.522 4.462
10 11 12				6.55 3.28	5.90 5.91 5.90	4.461 4.462 4.461
13 14 15					5.91 5.90 5.91	4.462 4.461 4.462
16 17 18					2.95	4.461 4.462 4.461
19 20 21						4.462 4.461 2.231

MACRS GDS PROPERTY CLASSES

Property Class	Personal Property (non-real estate)
3-year	Special devices food, special tools/jigs, ADR life < 4 years
5-year	Automotive, aircraft, R&D, computers, ADR<10 years
7-year	Office equipment, all other, 10
10-year	Refining, water vessels, 16
15-year	Telephone, municipal treatment, 20
20-year	Municipal sewers, 25
Property Class	Real Property (real estate)
27.5-year	Residential
39-year	Nonresidential