Ask Question
27 February, 00:31

A firm purchased and placed in service a new piece of semiconductor manufacturing equipment. The cost basis for the equipment is $100,000, and it will have a salvage value of $3,000 at end of year 7. The IRS has placed semiconductor manufacturing equipment in the 5-year recovery class. What is the depreciation charge in year 2, and what is the book value in year 2?

+4
Answers (1)
  1. 27 February, 00:48
    0
    Book Value at the end of year 2 is $48,000

    Explanation:

    The depreciation rate table for a property under the 5-year recovery class is:

    Year Depreciation charge

    1 20

    2 32

    3 19.2

    4 11.52

    5 11.52

    6 5.76

    Thus, given the cost of equipment = $100,000

    Depreciation charge in year 1 = 20% of $100,000

    Depreciation charge in year 1 = $20,000

    Depreciation charge is year 2 = 32% of $100,000

    Depreciation charge is year 2 = $32,000

    Book Value at the end of year 2 = $100,000 - $20,000 - $32,000

    Book Value at the end of year 2 = $48,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A firm purchased and placed in service a new piece of semiconductor manufacturing equipment. The cost basis for the equipment is $100,000, ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers