Purchase Solution

Asset Book Value After 2 Years

Not what you're looking for?

Ask Custom 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?

MACRS 5-Year property
Year Rate

1 20.00%
2 32.00%
3 19.20%
4 11.52%
5 11.52%
6 5.76%

(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

1. II only
2. III and IV only
3. I and III only
4. II and IV only
5. I, II, III, and IV

Purchase this Solution
Solution Summary

This solution identifies the correct asset cost for the book value of the equipment, and justifies why.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Multiple choice

    Under double declining balance method, depreciation = book value X 2/useful life The depreciation for 2006 = 60,000 X 2/4 (double declining rate is 2/useful life) = 30,000 opening book value in 2007 = 60,000-30,000=30,000 Depreciation in 2007 = 30,000

  • Calculating the net initial investment

    Compute the initial purchase price for an asset with book value of $34,800 and total accumulated depreciation of $85,200. Initial Price=Book Value+ Accumulated depreciation=34800+85200=$120,000 15.

  • Total dollar sales, cash receipts, net relevant cost and more

    a. 4 years b. 5 years c. 6 years d. 10 years e. 15 years 6. Carmino Company is considering an investment in an asset that generates net after-tax income of $6,000 at the end of each year of its four-year life. The asset has no salvage value.

  • Sale of Partially Depreciated Asset

    Round your answer to 2 decimal places. (e.g., 32.16)) Since the asset is depreciated over six years, the amount of depreciation per year is $237,600/6=$39,600. After tow years, the machine will have a value on the books of 4*$39,600 = $158,400.

  • Accounting Change and Error Analysis Problem

    The book value is Cost of Asset A $495,000 Less: Depreciation prior to 2008 148,500 Book value, January 1, 2008 $346,500 We use sum of year digits, the remaining life is 7 years, so the sum of years is 28 and the depreciation for 2008 will

  • Depreciation

    We subtract $6800 from our previous year's net book value to obtain our new net book value: 17,000 - 6,800 = 10,200.

  • Securities Valuation: Plantics Inc, Magic Kelly Productions

    We have, Book value of asset $250,000,000 Asset depreciated in 6 years $100,000,000 Gross investment before inflation $350,000,000 Inflation rate 3% Gross investment after inflation adjustment $417,918,303.79 After tax operating

  • Difference between the book value and Market value

    The value that has been created by technological innovations is enormous. Consequently, book value of common equity may be a downward-biased estimate of net asset value for some firms, especially in recent years.

  • Junction Company: Rate of return on gross book value

    on gross book value = income after depreciation / Gross book value = income after depreciation / book value before depreciation = income after depreciation / shareholders' equity + depreciation = 45,000 / (shareholders' equity + 50,000) Please

  • Change in Estimate

    depreciation = 8,000 Book value = Total cost - Accumulated depreciation = 80,000 - 8,000 = 72,000 2013 Book value on January 1, 2010 = 80,000 - (8,000 x 2) = 64,000 Depreciation expense = (Total cost/book value - Salvage value)/Useful life =

View More Related Solutions