Lew just purchased $67,600 of equipment that is classified as 5-year MACRS property.The MACRS rates are 20 percent,32 percent,19.2 percent,11.52 percent,11.52 percent,and 5.76 percent for Years 1 to 6,respectively.What will be the book value of this equipment at the end of four years if he ignores bonus depreciation?

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The book value of the equipment at the end of four years is $11,681.28. This is calculated by multiplying the original cost of the equipment by the MACRS rates for the first four years and then subtracting the total depreciation from the original cost.The MACRS rates for the first four years are 20 percent, 32 percent, 19.2 percent, and 11.52 percent. The total depreciation for the first four years is $67,600 x (20% + 32% + 19.2% + 11.52%) = $45,916.80. The book value of the equipment at the end of four years is $67,600 - $45,916.80 = $11,681.28.

Lew Just Purchased $67,600 of Equipment That Is Classified as 5-Year