Data Formulas Review View Wrap Text General 10 A- A Home Insert Page Layout X Cut Times New... Copy Paste B 1 U Format 1111 x fe Morge & Center - K L F G H D E B Your firm recently purchased an industrial machine costing $S25,000. It is classified as a seven-year property under MACRS. What are the annual 87 depreciation allowances and end-of-the-year book values for this machine? 88 89 Finance Concept: For tax purposes, the depreciation expense is computed under MACRS, which was 90 enacted as part of the Tax Reform Act of 1986. The depreciation is larger at the beginning, Erding Book Beginning Book Value Value Depreciation Allowance Year 1 2 3 4 5 6 2 8 7 Year MACRS 14.2956 24 4946 17.49% 12.49% 8.93% 8.93% 8.93% 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 Solution I Enter the Beginning Book Value (cost of the machine) in cell E93. 2 Calculate the remaining Beginning Book Values enter -193 in cell E94 and copy down the column. 3 Calculate the Depreciation Allowance by multiplying SE$95 (Beg Bk V) 593 (MACRS %). 4 Find the Ending Book Value by subtracting the depreciation from the Beginning Book Value 5 Copy all your formulas down the columns 6 Your 8 Ending Book Value should equal zero, and beg bk val - depreciation in year 8