Given the following information, determine the unrecovered depreciable basis: Depreciable Basis: $300,000, Declining Balance Depreciation: 200%, Cost Recovery Period: 7 years.

Question

Quizplus · Accepted Answer

To calculate the unrecovered depreciable basis, we first need to calculate the total depreciation taken on the asset so far. The Declining Balance Depreciation of 200% means that the annual depreciation rate is double the straight-line depreciation rate. Therefore, the annual depreciation rate is 28.57% (100%/7 years x 2 = 28.57%).

After the first year, the depreciation would be $85,714 ($300,000 x 28.57%). After the second year, the depreciation would be $119,517 ($214,286 x 28.57%). After the third year, the depreciation would be $85,718. From this, we can see that the total accumulated depreciation after three years is $290,949 ($85,714 + $119,517 + $85,718).

The unrecovered depreciable basis is simply the depreciable basis minus the accumulated depreciation. Therefore, the unrecovered depreciable basis is $9,051 ($300,000 - $290,949). The closest answer choice is C) $214,286.

Given the Following Information, Determine the Unrecovered Depreciable Basis: Depreciable