You just purchased some equipment that is classified as 5-year property for MACRS.The equipment cost $67,600.What will the book value of this equipment be at the end of three years should you decide to resell the equipment at that point in time? $$\begin{array}{l}
\text { MACRS 5-year property }\
\begin{array} { l r }
\underline{\text { Year }} &\underline{ \text { Rate } }\
1 & 20.00 \% \
2 & 32.00 \% \
3 & 19.20 \% \
4 & 11.52 \% \
5 & 11.52 \% \
6 & 5.76 \%
\end{array}
\end{array}$$

Question

You just purchased some equipment that is classified as 5-year property for MACRS.The equipment cost $67,600.What will the book value of this equipment be at the end of three years should you decide to resell the equipment at that point in time? $$\begin{array}{l}
\text { MACRS 5-year property }\
\begin{array} { l r } 
\underline{\text { Year }} &\underline{ \text { Rate } }\
 1 & 20.00 \% \
2 & 32.00 \% \
3 & 19.20 \% \
4 & 11.52 \% \
5 & 11.52 \% \
6 & 5.76 \%
\end{array}
\end{array}$$

Quizplus · Accepted Answer

The book value of the equipment at the end of three years is $20,280.20. This is calculated by multiplying the original cost of the equipment by the MACRS depreciation rate for each of the three years and then subtracting the total depreciation from the original cost.Year 1: $67,600 x 20.00% = $13,520Year 2: $67,600 x 32.00% = $21,632Year 3: $67,600 x 19.20% = $12,989Total depreciation: $13,520 + $21,632 + $12,989 = $48,141Book value: $67,600 - $48,141 = $20,280.20

You Just Purchased Some Equipment That Is Classified as 5-Year