= Hotels are considered non-residential real property and are depreciated over a 39-year life. Land is not depreciated. Investors in the RCS group purchased a hotel resort in February, the group paid $35 Million for the hotel resort and SSMillion for the grounds surrounding the resort. The group soid the resort 5 years later in October MACRS GDS method- dt = B xit dt_ Depreciation deduction in year t B- Cost basis being depreciated It - Appropriate MACRS percentage rate Book Value = Cost basis - Depreciation charges made to date BV1 = Cost Basis - Depreciation charges made to date Monthly Recovery percentage rates for non-residential real property Recovery Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 1 2.461 2.247 2.033 1.819 1.605 1.391 1.177 0.963 0.749 0.535 0.321 0.107 2-39 2.564 2.564 2.564 2.564 2.364 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0.535 0.749 0.963 1.177 1.391 1.605 1.819 2.033 2.247 2.461 Note: a percentage rate of 2.461% = 0.02461 a. Use the MACRS GDS method to calculate the depreciation deductions for years 1 through 6 and fill out the Depreciation deduction table. Using dt - Bxft Note: The hotel resort was purchased in February, so the monthly percentage rate to be used for the first year is that for February. Similarly, the hotel resort was sold in October, so in calculating year 6, use the percentage rate stated for October of the 40 year. Depreciation Deduction Table (6marks) Year 1 (obtained in April) 041 = 35,000,000 x Year 2 012 - X Year 3 (3= X Year 4 044 = Year 5 dt5 = X Year 6 dt6 = X Summation dt = b.) Calculate the Book Value (BV+) = Cost - Summation dt C.) List two other methods of calculating Depreciation. 1.) ii)