Problem 07-17 (Algo) [LO 7-5, 7-11) Suber Incorporated, a calendar year taxpayer, purchased equipment for $870,000 and placed it in service on March 1. Suber's chief engineer determined that the equipment had an estimated useful life of 120 months and a $57,000 residual value. For financial statement purposes, Suber uses the straight-line method to compute depreciation. Use Table 7-2 Required: a. Compute book depreciation for the year. b. Assuming that the equipment has a seven-year recovery period and is subject to the half-year convention, compute MACRS depreciation for the year. c. Compute Suber's book basis and tax basis in the equipment at the beginning of next year. Required A Required B Required C Compute book depreciation for the year. Book depreciation Required A Required B Required C Assuming that the equipment has a seven-year recovery period and is subject to the half-year convention, compute MACRS depreciation for the year. MACRS depreciation Required A Required B Required C Compute Suber's book basis and tax basis in the equipment at the beginning of next year. Amount Book basis Tax basis TABLE 7.2 MACRS for Business Personalty (Half-Year Convention) Year 3-Year 5-Year 15-Year 20-Year 1 2 33.33% 44.45 14.81 7.41 3 4 5 6 20.00% 32.00 19.20 11.52 11.52 5.76 Recovery Period 7-Year 10-Year Depreciation Rate 14.29% 10.00% 24.49 18.00 17.49 14.40 12.49 11.52 8.93 9.22 8.92 7.37 8.93 6.55 4.46 6.55 6.56 6.55 3.28 7 8 5.00% 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 9 10 11 12 13 14 3.750% 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 15 16 17 18 19 20 21