An income producing asset costing 190000 is being depreciate

An income producing asset costing $190,000 is being depreciated using MACRS GDS. The salvage value of the asset is $7,000. The class life of the asset is 7 years. Calculate the book value of the asset at the end of year 3.

Solution

Year

Opening bookvalue

Rate

Depreciation

Closing Book value

1

190,000

14.29%

27143

162,857

2

162857

24.49%

46531

116,327

3

116327

17.49%

33236

83,090

The above calculation is based on the Double declining method under MACRS

So Book value at the end of year 3 would be $83,090

Year	Opening bookvalue	Rate	Depreciation	Closing Book value
1	190,000	14.29%	27143	162,857
2	162857	24.49%	46531	116,327
3	116327	17.49%	33236	83,090