Bet'r Bilt Toys just purchased some MACRS 5-year property at a cost of $230,000. Which of the following will correctly give you the book value of this equipment at the end of year 2? $$\text { MACRS 5-year property }$$
$\begin{array}{cr}
\text { Year } & \text { Rate } \
1&20.00\%\
2 & 32.00 \% \
3 & 19.20 \% \
4 & 11.52 \% \
5 & 11.52 \% \
6 & 5.76 \%
\end{array}$

I.52% of the asset cost
II.48% of the asset cost
III.68% of 80% of the asset cost
IV.the asset cost, minus 20% of the asset cost, minus 32% of 80% of the asset cost

Question

Bet'r Bilt Toys just purchased some MACRS 5-year property at a cost of $230,000. Which of the following will correctly give you the book value of this equipment at the end of year 2? $$\text { MACRS 5-year property }$$
$\begin{array}{cr}
\text { Year } & \text { Rate } \
1&20.00\%\
2 & 32.00 \% \
3 & 19.20 \% \
4 & 11.52 \% \
5 & 11.52 \% \
6 & 5.76 \%
\end{array}$

I.52% of the asset cost
II.48% of the asset cost
III.68% of 80% of the asset cost
IV.the asset cost, minus 20% of the asset cost, minus 32% of 80% of the asset cost

Quizplus · Accepted Answer

The book value at the end of year 2 is the original cost minus the accumulated depreciation for years 1 and 2. The accumulated depreciation is 20% + 32% = 52%, so the remaining book value is 48% of the asset cost.

Bet'r Bilt Toys Just Purchased Some MACRS 5-Year Property at a Cost