Question

MicroMax smartphones Company purchased new equipment on September4, 2014, at a cost of $90,000. Useful life of this equipment was estimated at 4 years, with an estimated at 4 years, with an estimated residual value of $10,000. For income tax purposes, this equipment is classified as “3-years property”.

Required:

Compute the annual depreciation expense for each year until this equipment becomes fully depreciated under each of the depreciation methods listed below. Because you will record depreciation for only a fraction of a year in 2014, depreciation will extend through 2017 in all methods except MACRS. Show supporting computations.

a) Straight-line with depreciation for fractional years rounded to the nearest whole month.

b) Sum-of-the-years-digits, with the half year convention.

c) 200%-declining-balance with half year convention.

d) MACRS accelerated rates for “3-years property”.​

Answer 1

Answer:

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