Your company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $182,000. With additional options costing $13,000, the cost basis for depreciation purposes is $195,000. Its MV at the end of five years is estimated as $43,000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year two? b. What is the MACRS depreciation in the second year? c. What is the BV at the end of year one? Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. The cumulative depreciation through the end of year two is $ (Round to the nearest dollar.) Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 MACRS Class Lives and Recovery Periods Recovery Periods Descriptions of Assets Class Life GDS ADS Office furniture and equipment 10 7 10 Information systems, including computers 6 5 Automobiles, taxis 3 5 Buses 9 9 Light general purpose trucks 4 5 Heavy general purpose trucks 6 6 Tractor units for use over the road 4 4 Agriculture 10 10 Mining 10 10 Production of petroleum and natural gas 14 14 Petroleum refining 16 10 16 Construction 6 5 6 Manufacture of carpets 5 9 Manufacture of wood products and furniture 10 10 Manufacture of chemicals and allied products 9.5 5 9.5 Manufacture of rubber products 14 7 14 Manufacture of cement 20 15 20 Manufacture of fabricated metal products 12 7 12 Manufacture of electronic components, products, and 5 6 systems Manufacture of motor vehicles 12 7 12 Manufacture of aerospace products 10 7 10 Talonhona central office equinment vvovao ovvvwa a aa a 999 4w26 36.0 37.11 37.2 18 12 18 10 18 UU.TI 10 TU 6 5 bo 5 9 9 5 4 6 6 4 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 4 10 10 14 vvovao ovvvwo or orci a 10 16 UTTIce Turniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation 6 10 10 14 16 6 9 10 9.5 14 20 12 9 10 9.5 14 20 12 15 36.0 6 5 6 37.11 37.2 48.12 49.13 49.21 79.0 12 10 18 28 35 10 7 7 10 20 20 7 12 10 18 28 35 10 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 GDS Recovery Rates (k) for the Six Personal Property Classes Recovery Period (and Property Class) 3-yeara 5-yeara 7-yeara 10-yeara 15-yearb 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 17 18 19 20 21 a These rates are determined by applving the 200% DB method (with switchover to the SL method) to the 1 2 3 4 0.3333 0.4445 0.1481 0.0741 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 0.1429 0.2449 0.1749 0.1249 0.0893 0.0892 0.0893 0.0446 5 6 7 8 9 10 11 12 13 14 15 0.1000 0.1800 0.1440 0.1152 0.0922 0.0737 0.0655 0.0655 0.0656 0.0655 0.0328 0.0500 0.0950 0.0855 0.0770 0.0693 0.0623 0.0590 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 16 17 18 19 20 21 aThese 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. Your company has purchased a large new trucktractor for over-the-road use (asset class 00.26). It has a cost basis of $182,000. With additional options costing $13,000, the cost basis for depreciation purposes is $195,000. Its MV at the end of five years is estimated as $43,000. Assume it will be depreciated under the GDS: a. What is the cumulative depreciation through the end of year two? b. What is the MACRS depreciation in the second year? c. What is the BV at the end of year one? Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). a. The cumulative depreciation through the end of year two is $ (Round to the nearest dollar.) Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 MACRS Class Lives and Recovery Periods Recovery Periods Descriptions of Assets Class Life GDS ADS Office furniture and equipment 10 7 10 Information systems, including computers 6 5 Automobiles, taxis 3 5 Buses 9 9 Light general purpose trucks 4 5 Heavy general purpose trucks 6 6 Tractor units for use over the road 4 4 Agriculture 10 10 Mining 10 10 Production of petroleum and natural gas 14 14 Petroleum refining 16 10 16 Construction 6 5 6 Manufacture of carpets 5 9 Manufacture of wood products and furniture 10 10 Manufacture of chemicals and allied products 9.5 5 9.5 Manufacture of rubber products 14 7 14 Manufacture of cement 20 15 20 Manufacture of fabricated metal products 12 7 12 Manufacture of electronic components, products, and 5 6 systems Manufacture of motor vehicles 12 7 12 Manufacture of aerospace products 10 7 10 Talonhona central office equinment vvovao ovvvwa a aa a 999 4w26 36.0 37.11 37.2 18 12 18 10 18 UU.TI 10 TU 6 5 bo 5 9 9 5 4 6 6 4 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 4 10 10 14 vvovao ovvvwo or orci a 10 16 UTTIce Turniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation 6 10 10 14 16 6 9 10 9.5 14 20 12 9 10 9.5 14 20 12 15 36.0 6 5 6 37.11 37.2 48.12 49.13 49.21 79.0 12 10 18 28 35 10 7 7 10 20 20 7 12 10 18 28 35 10 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 GDS Recovery Rates (k) for the Six Personal Property Classes Recovery Period (and Property Class) 3-yeara 5-yeara 7-yeara 10-yeara 15-yearb 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 17 18 19 20 21 a These rates are determined by applving the 200% DB method (with switchover to the SL method) to the 1 2 3 4 0.3333 0.4445 0.1481 0.0741 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 0.1429 0.2449 0.1749 0.1249 0.0893 0.0892 0.0893 0.0446 5 6 7 8 9 10 11 12 13 14 15 0.1000 0.1800 0.1440 0.1152 0.0922 0.0737 0.0655 0.0655 0.0656 0.0655 0.0328 0.0500 0.0950 0.0855 0.0770 0.0693 0.0623 0.0590 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 16 17 18 19 20 21 aThese 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