Western Steer purchased some three-year MACRS property three years ago.What is the current book value of this quipment if the original cost was $94,250? The MACRS allowance percentages are as follows,commencing with Year 1: 33.33,44.45,14.81,and 7.41 percent.

Question

Quizplus · Accepted Answer

Using the MACRS allowance percentages, we can calculate the accumulated depreciation for the three-year period as follows:
Year 1: $94,250 x 33.33% = $31,416.83
Year 2: ($94,250 - $31,416.83) x 44.45% = $24,914.61
Year 3: ($94,250 - $31,416.83 - $24,914.61) x 14.81% = $8,926.66
Total accumulated depreciation = $31,416.83 + $24,914.61 + $8,926.66 = $65,258.10
Therefore, the current book value of the equipment is $94,250 - $65,258.10 = $28,991.90. However, since this is a three-year MACRS property, it would have been fully depreciated after three years, which means that the book value would be zero. Therefore, the best choice is C.

Western Steer Purchased Some Three-Year MACRS Property Three Years Ago