Homework SourseA bowling alley costs 3400000 and has a useful life of 10 ye
A bowling alley costs $3,400,000 and has a useful life of 10 years. Its estimated MV at the end of year 10 is $1,000,000. The MARR is 12% per year. Create a spreadsheet that calculates the depreciation for years 1– 10 using: the MACRS method (GDS)
Identify the Asset Class =
Identify the Class Life
Identify the GDS Recovery Period =
| Identify the Asset Class = | |
| Identify the Description of the Asset = | |
| Identify the Class Life | |
| Identify the GDS Recovery Period =
|
Solution
Answer
Answer 1
Identify the Asset Class & Identify the Description of the Asset
Asset class 79.0, Recreation:
Includes assets used in the provision of entertainment services on payment of a fee or admission charge, as in the operation of bowling alleys, billiard and pool establishments, theatres, concert halls, and miniature golf courses. Does not include amusement and theme parks and assets which consist primarily of specialized land improvements or structures, such as golf courses, sports stadia, race tracks, ski slopes, and buildings which house the assets used in entertainment services.
Answer 2
Identify the Class Life
Assets used in recreation businesses. Assets used in the provision of entertainment services for payment of a fee or admission charge are 7-year MACRS property with a 10-year ADS depreciation period (Asset Class 79.0). Examples include assets used in bowling alleys, billiard and pool halls, theatres, concert halls, and miniature golf courses. Specialized land improvements and structures such as golf courses, sports stadia, race tracks, and ski slopes are specifically excluded from this class. Buildings which house the assets used in providing the entertainment services are also excluded and treated as 39-year real property.
Answer 3 :
Identify the GDS Recovery Period
Answer4
Select the GDS Recovery Rates (rk) & Create a spreadsheet that calculates the depreciation for years 1– 10 using: the MACRS method (GDS)
Figures in $
Year
Value of asset
(MACRS GDS Method) rates
Depreciation
A
B
A*B
1
3400000
3.57%
121380
2
3400000
27.55%
936700
3
3400000
19.68%
669120
4
3400000
14.06%
478040
5
3400000
10.04%
341360
6
3400000
8.73%
296820
7
3400000
8.73%
296820
8
3400000
7.64%
259760
9
10
100.00%
3,400,000
| Figures in $ | |||
| Year | Value of asset | (MACRS GDS Method) rates | Depreciation |
| A | B | A*B | |
| 1 | 3400000 | 3.57% | 121380 |
| 2 | 3400000 | 27.55% | 936700 |
| 3 | 3400000 | 19.68% | 669120 |
| 4 | 3400000 | 14.06% | 478040 |
| 5 | 3400000 | 10.04% | 341360 |
| 6 | 3400000 | 8.73% | 296820 |
| 7 | 3400000 | 8.73% | 296820 |
| 8 | 3400000 | 7.64% | 259760 |
| 9 | |||
| 10 | |||
| 100.00% | 3,400,000 |
