Engineering Economy 16th Edition by William Sullivan ,Elin Wicks, Koelling,

Exercise 8

An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000, and it has an estimated MV of $12,000 at the end of an estimated useful life of 14 years. Compute the depreciation amount in the third year and the BV at the end of the fifth year of life by each of these methods: Problem 1 and 2
a. The SL method.
b. The 200% DB method with switchover to SL.
c. The GDS.
d. The ADS.
Problem 1
Explain the difference between real and personal property. (Problem)
Problem
What conditions must a property satisfy to be considered depreciable
Problem 2
Explain how the cost basis of depreciable property is determined.