A machine used in the manufacture of fabricated metal products at Crimson Tide Inc., with a useful life of 12 years, is to be depreciated by the MACRS method for tax depreciation purposes. The machine has a first cost of $23,000 with a $3000 salvage value. The company's controller wants to understand the effects of the difference in the annual depreciation charge for SL and MACRS with GDS recovery period. Using a half- year convention for both methods, determine the differences in the book value if the machine is sold at the end of year 5.

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The Answer of A machine used in the manufacture of fabricated metal products at Crimson Tide Inc., with a useful life of 12 years, is to be depreciated by the MACRS method for tax depreciation purposes. The machine has a first cost of $23,000 with a $3000 salvage value. The company's controller wants to understand the effects of the difference in the annual depreciation charge for SL and MACRS with GDS recovery period. Using a half- year convention for both methods, determine the differences in the book value if the machine is sold at the end of year 5.

A Machine Used in the Manufacture of Fabricated Metal Products