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Please DO NOT use excel or spreadsheet functions. All calculations by hand 4. The results of accelerated tests showed that the average useful life of
Please DO NOT use excel or spreadsheet functions. All calculations by hand
4. The results of accelerated tests showed that the average useful life of most laptops is 3 years and have a $50 salvage value at the end of year 3. A company is trying to evaluate how much their laptops have depreciated. According to the straight line (SL) depreciation method, a 2- year old laptop has a book value of $300. The double declining balance (DDB) depreciation values the same laptop at $88.89 and the modified accelerated cost recovery system (MACRS) values at $177.76 a. Determine the first cost of the laptop b. Depreciation rate for the MACRS with n 3 is 33.33% in year 1, 44.45% in year 2, and 14.81% in year 3, Determine the book value in year 3 (BVs) for SL, DDB, and MACRS, and compare with the salvage value. Explain the reason for difference, if any. If laptops are taxable, which depreciation method is more appropriate? Why? cStep by Step Solution
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