Western Wear purchased some 3-year MACRS property 3 years ago. What is the current book value of this equipment if the original cost was $48,000? The MACRS allowance percentages are as follows, commencing with year one: 33.33, 44.45, 14.81, and 7.41 percent.

Question

Quizplus · Accepted Answer

The current book value is calculated by subtracting the accumulated depreciation from the original cost. The accumulated depreciation over 3 years is 33.33% + 44.45% + 14.81% = 92.59%. Therefore, the book value is 7.41% of the original cost: $48,000 * 7.41% = $3,557.

Western Wear Purchased Some 3-Year MACRS Property 3 Years Ago